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Micro finance is often described as financial assistance to low income individuals who have limited or no access to formal target people who are below the national average income line. The term ‘micro’ is used here because the amount of financial assistance that is granted to the poor is in a small amount – small loan.. This helps it differentiate from formal banks which disburse loan in big quantities mostly to the already rich people. Because of the recent global recession, governments in many developing countries’ are encouraging micro financing as it is believed that it is the most effective method to reduce poverty while empowering individuals. Today there are more than 160 million people in developing countries who are being served by micro financing institutions.