authors
Reena Yadav

abstract
India, a developing country, rising its Gross domestic product, its Human Development Index, its financial capital and exports almost every year but one thing that is still sheer worrisome in this country is 'INEQUALITY'. About 1% richest of this country are keeping and controlling a revelatory portion of nation's wealth, meanwhile there is a significant population who is suffering from severe poverty. They are starving from nutritional food, good healthcare, better education, secured houses and employment opportunities. These people were relying on informal sources for small and big credits for a long time and getting exploited from big money lenders. This urban, rural division has always been a concern for our government and regulatory authorities. For narrowing down this division, Microfinancing has played a great role. Microfinance has emerged as a key strategy for poverty alleviation in India, particularly in rural areas, by providing financial services to underserved population. Poverty is defined by lack of income and inaccessible credit. It is necessary to make the financial product accessible to the underserved people for alleviation of poverty. Since independence, our government is trying to make it possible through Self-help groups, by development of Regional Rural Banks, by allowing NBFC-MFI and by initiating many more microfinancing programs like JAN-DHAN YOJNA, MUDRA YOJNA, KISAN CREDIT CARDS, JEEWAN JYOTI YOJNA etc. These initiatives have provided a significant change in financial exclusion. Microfinance has empowered millions, especially women and MSME's, by facilitating access to credit, savings, and insurance but there are certain challenges which are dragging down the effectiveness of these microfinancing initiatives. This sector faces several issues, including high interest rates, over-indebtedness, and limited sustainability of microfinance institutions (MFIs). This critical review examines the effectiveness, challenges, and limitations of microfinance initiatives in India. The review highlights the role of government policies, self-help groups, and the involvement of commercial banks in shaping the landscape of microfinance in India. Additionally, it scrutinizes the socio-economic impact of microfinance on beneficiaries, questioning whether it has led to substantial improvements in income generation and long-term financial independence. The review also addresses the ethical concerns regarding the commercialization of microfinance and the potential for exploitation of the poorest. Ultimately, the paper calls for a more integrated approach, with a focus on financial literacy, regulatory oversight, and innovative models to ensure the inclusivity and sustainability of microfinance in India.