is becoming one of the most effective financial tools to help reduce poverty in developing countries. Nepal, since 1974, has been undertaking different micro financing models to cater the credit need of the rural poor thereby involving them in income generation. Country’s effort in this regard greatly contributed to the poor to raise their income level. From Priority Sector Credit Program (PSCP) for the commercial banks, Small Farmers Development Programme (SFDP) introduced in early seventies to the Grammen model of micro financing are some of the best efforts on microfinancing introduced in Nepal. UNO has declared micro credit as a financial tool to achieve its Millennium Development Goals (MDGs) 2015, where a target of 175 million poor people who live below US $ 1 per day has been set to be outreached by microfinancial services by the end of 2015.