New Delhi, June 6 : Microfinance in India has a long history. Since the turn of this century, it has been expanding rapidly as a viable financial services business because of the influx of Microfinance NBFCs, growth of the self-help groups (SHG) business by Public Sector Banks, and under the NRLM (National Rural Livelihood Mission).

It witnessed the introduction of the Small Finance Banks and major private sector banks playing an increasing role in this segment. The industry has had its ups and downs due to external shocks, but has proven to be resilient. It has evolved into one among the fastest growing and most profitable segments of the lending business, creating a positive impact on the lives of a large number of families served by the financial sector.
As on March 2023, the microfinance gross loan portfolio was more than Rs 5 lakh crore serving over 13 crore borrowers, compared with a portfolio of Rs 51,773 crore and approximately 7 crore borrowers in March 2012. The borrower base multiplied by 2X; the portfolio by 10X since 2012. The fast-growing 'Individual Loan' portfolio is not included in these numbers because of the absence of a reliable industry source.
Organised microfinance in the country officially dates back to 1974. This was when Ela R. Bhat set up the Self-Employed Women Association (SEWA) in Ahmedabad to provide banking services and individual loans to self-employed poor women of the unorganised sector. SEWA was operating as a cooperative bank. The concept of 'Self-Help Groups' (SHG) was established by Aloysius Prakash Fernandez at MYRADA, in collaboration with Canara Bank, in the 1980s.