Micro Finance is a type of banking service that is provided to unemployed or low income individual, or groups who otherwise have no other access to financial services. The main goal of micro finance is to empower under- privileged class of society, women and poor. The idea of micro finance was developed as survival strategy for the poor. Ela Bhatt in India and Professor Muhammad Yunus of Bangladesh are the pioneers in this field. For the development of under developed countries, a strong finance system is required. The goal of inclusive growth can be achieved by financial inclusion. Financial inclusion is delivery of financial services; at affordable cost to section of disadvantage and low income groups and weaker sections. Micro finance has significant role in bridging the gap between formal financial institution and rural poor. This paper aims to study the concept of microfinance and microfinance institution. This paper also describes the impact of micro finance on financial inclusion with special focus on poverty eradication. The paper also discusses the type of MFIs, its working and geographical spread, branch network, and client outreach and portfolio size of micro finance institution.