Microfinance plays an important role for rural development. Poor group of society can start their Own small business on small level and create new job opportunities with the help of Microfinance. Microfinance is the backbone of rural economy. For this study researcher collected information from 192 respondents of rural area of Morena district of Madhya Pradesh. The objectives of this study are to know the impact of Microfinance on rural development and to know the relationship between Microfinance and rural development. Linear regression analysis used to check the hypothesis and find out the result with the help of SPSS software and it is found that Microfinance and rural development is correlated with each other having r value 0.784, and Microfinance has a significant and positive impact up to 61.50% having r² value 0.615. The computed value of F is 194.907, which is given in ANOVA table greater than its critical value for 191 degree of freedom at 0.054 level of significance also indicate that Microfinance has a positive and significant impact on rural development. The computed value of t is 7.676, which is also greater than its standard value i.e. 1.96, indicating that there is a significant impact of Microfinance on rural development.

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Keywords: Microfinance, Rural Development, Rural Economy, Significant Impact, Correlated.