Micro financing is regarded as an effective tool for getting rid of poverty in the rural sector population particularly, among women and landless in the developing world. In this context, Sri Lanka, an island nation having located in the Indian Ocean being a newly categorized low middle income country with a fast growing economy in South Asia is still burdening with a significant low income among rural population. In order to overcome the challenge of low income, micro financing institutions both government and non-government sectors are active in rural areas ensuring access to formal financial services by way of lending and saving money to those rural people in poverty. However, lack of employment opportunities, falling income due to inclement weather and natural disasters, poor rural infrastructure, land fragmentation and lack of incentives have been obstructing the prospects of getting rid of poverty despite opportunities being offered by micro financing in the country. This paper in this backdrop is an attempt to study realities, challenges and opportunities in micro financing as a means of alleviating poverty and low income in the rural sector in Sri Lanka.
