This study address some important issues related to the microfinance sector: outreach of microfinance, role of informal sources of finance and the impact on poverty and welfare of households. The study recognizes that financial services alone are not sufficient to raise the living conditions of the poor. To create sustainable micro-enterprise and other economic activities, it is important that MFIs facilitate or directly involve in providing 'credit-plus' services to their clients, particularly to those in low income categories. Development of rural infrastructure facilities is of prime importance to improve the outreach of MFIs in remote rural areas and encouraging the private and NGO sectors to involve more effectively in microfinance provision. The study also stresses the need to take into account the heterogeneity of microfinance clients and their needs in designing more effective microfinance instruments.

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