Microfinance is a financial service to low-income individuals or to those who do not have direct access to typical banking services. The idea behind microfinance is that it can uplift the individuals with low-income out of poverty if given access to financial services. Though microfinance service can lift the individual out of poverty but it cannot be seen as a tool for poverty elimination.
Microfinance includes number of financial services like:
Microfinance is the supply of loans, savings, and other basic financial services to the poor. (http://cgap.org) Microfinance is meant for poor people. Poor people make savings informally, they mostly invest their cash in assets like domestic animals, gold, jewelry, and building materials which can be easily exchanged with cash. Such informal savings may not always be beneficial, as they cannot be promptly converted to cash whenever required and may suffer loss in case of gold, jewelry due to fluctuation in price in commodity market, illness in case of domesticated animals, and loss due to fire and other natural calamities.