Microfinance is a very broad term used to refer to financial services provided to low-income and poor customers, which have been
excluded from the traditional banking system - banking unbanked. It is generally used for micro credit / micro loans but also
includes micro insurance, micro savings and other financial services. Microfinance is playing an important role in financial
inclusion in India, which has come into existence to serve smaller and more overlooked sections of society. Commercial banks,
small finance banks, microfinance institutions, NBFCs, not-for-profit, microfinance institutions are the major players providing
microfinance in India. MFIs were able to grow rapidly and expand their portfolio. But they did so without spending time that was
previously invested in carefully building relationships with customers with customer selection, training, staff orientation, and system
development. The growth and success of MFIs increased competition and created problems for both MFIs and their customers.
