A microfinance firm is a business that provides small-scale financial services like loans, credit, or savings. Since small firms are unable to acquire bank loans due to the lengthy application process, these companies were established to streamline the credit system for them. It is frequently referred to be a micro-credit organisation as a result. Numerous households and small enterprises that lack access to or are not eligible for standard banking services are given microloans by them.Rural residents are eligible for small loans of up to Rs. 50,000, whereas urban residents are only eligible for loans of up to Rs. 1,25,000. Establishing a Section-8 Company with the Ministry of Corporate Affairs (MCA) is the easiest way to start a Micro Finance Company in India. This may be done without investing any additional money or offering any kind of guarantee. The RBI and the federal government may mandate a microfinance organisation to offer loans at low interest rates. They contribute significantly to all facets of rural and agricultural development, including the generation of money and jobs.In India, there are primarily 2 types of microfinance organisations that are permitted; the first type must be registered with the latter is a non-profit organisation that is registered as a section 8 company and does not require approval from the RBI.