There is a lot of potential for the idea of microfinance in every non-industrial country, including India. By and by, microfinance is recognized by the presence of an exorbitant loan fee. The propensity for charging extremely exorbitant financing costs is habitually vigorously chastised for the making of a "obligation trap." moreover, there are sure cases that are accounted for to incorporate suicides. There are a many individuals that are devastated, and it is just sensible that they could never get cash. This is the kind of thing that the public authority is completely mindful of. The Malegam Board of trustees, which was comprised by the public authority, made a suggestion that the expense of getting cash ought to be allowed to be essentially as high as 26% each year or much higher. Along these lines, the extent of microfinance is restricted due to the actual idea of the idea. Inside the structure of this conversation, we examined the reasoning for such an exorbitant loan cost. Microcredit can possibly permit people to become independent, as opposed to most of other taxpayer supported initiatives, for example, MNEGRS and consumption on sponsorships, which save the beneficiaries straightforwardly reliant upon the public authority for an endless timeframe. In this way, it is just normal for the public authority to play a more straightforward job in the microfinance program and potentially help microfinance establishments with interest sponsorships or delicate credits for microfinance. The report likewise examined the peril of microcredit and found that there is a lot of opportunity to get better as far as bringing down loan costs. In this manner, whether seen from a social or a business viewpoint, the pace of interest in the microfinance business is something that ought to be inspected.

KEYWORDS: Microfinance, Interest Rates, Developing Nations, India, Debt Trap, Malegam Committee, Government Policies, Poverty Alleviation.