According to a World Bank, report India accounts for one in three of the world population worldwide. It has most number of the people who live below the international poverty line of $1.90 a day. India’s economic growth has been unsuccessful on making a notable difference on the poverty figures. Poverty deprives a segment of society with bare necessities of food, clothing, shelter, education and health. In a fight against poverty the goal should not be only limited to increasing the income level of individual, household or the group but also mainstreaming the marginalized in the development process of the country. The government of India initiated various programmers to ease the burden of poverty holding healthcare, education, nutrition, and support to vulnerable groups. The microfinance has come forward to fill the gap and is considered as an effective tool for poverty reduction and socio-economic development. The impact of microfinance is still questioned and varies from one country to another and from urban to rural. The paper is structured into three parts the first part to analyze the growth of microfinance in India and secondly it examines the role and performance of the NABARD and other institutions in strengthening the SHGs and MFIs and the and lastly the paper presents a brief discussion on the shortcomings and recommendations to be adopted to make microfinance more inclusive
