Microfinance has proven itself to be one of the most significant tools to reduce the state of poverty in developing countries. It helps to gather people of low income to form self-help groups in order to facilitate services like credit, savings and insurance among the group. It provides opportunity for the people to get self employed by opening industries and businesses, helping them to tackle all the problems relating to poverty. In the previous two decades the microfinance industry has been catering the monetary needs of the poor people whom the traditional banks have rejected due to lack of collateral. The purpose of this paper is to present detailed analysis on the concept, history, evolution, and models of Microfinance. This paper also covers gap of financial literacy on Microfinance and its facilities.