| This paper describes the conscious action of national government, non-governmental organizations (NGOs) and donors who view microfinance as an effective tool for alleviating poverty. Since much of the impetus behind the large and increasing support for microfinance hinges on the assumption that its economic and social impact are significant, it need to be examined more closely. This is important, for only through cycle of innovations, experiments and evaluation can hope to establish lasting institutions that alleviate the financial constraints faced by the poor. The effective role of the Self Help Groups (SHGs) has positive effect on reducing poverty among its members. The sustainability and cost effectiveness with in the microfinance program is important for the long run poverty eradication. The SHG model has tremendous potential to reduce poverty.MFIs and SHGs should co-operate and become partners in the wider mission of poverty eradication. |