Role of Financial Institutions for Sustainable Development: A Review Based Approach

For the last two decades, microfinance and financial inclusion have been remained to be very efficient tool for the provision of financial services to the poor. Micro finance can be described as provision of small-scale financial services to clients who are economically active in various urban and rural areas. According to its definition, micro finance is the provision of thrift, credit and other financial services and products of very small amounts mainly to the poor in rural and urban areas for enabling them to raise their income level and improve living standards. Besides, financial inclusion plays a major role in driving away the poverty from the country. It refers to delivery of financial services to masses of disadvantaged people at an affordable terms and conditions. In another word, it is an important step to bring financially excluded people within the fold of the formal financial sectors. This paper aims to study the concept of microfinance and its association with financial inclusion in Indian context. It is based on secondary data collected from different publications such as Reserve Bank of India (RBI), journal articles, websites and various related research works. Moreover, the study tries to discuss that even though microfinance is playing a vital role for development and those profit-oriented microfinance institutions, still it is not up to the expected level. Thus, to fulfill even some of its progressive goals, it must be regulated and subsidized, and other strategies for viable financial inclusion of the poor and of small producers must be more actively pursued.