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Synopsis For the past three decades, the microfinance sector has remained an important source for providing finance to the poor and the marginalized sections of society. This sector has been driven primarily by social objectives, led by non-governmental organisations and charities, with funding largely in the form of donor money or subsidized credit. But, today, a new paradigm of ‘commercial’ microfinance’ is taking shape: on the one hand, commercial banks are entering the field, and on the other, MFIs (microfinance institutions) are going public and raising money from equity and debt capital markets, or transforming themselves into for-profit entities from non-profit bodies. This influx of private capital into a hitherto donor-money-driven sector is largely due to the recognition of microfinance as a profit-making proposition, as evidenced by the high repayment rates (over 95% on an average, with some even recording rates as high as 98%) in microfinance. This new trend is also helping the microfinance sector in accessing the much-needed funds; donor money ultimately is limited and can only fulfill so much of the demand, which far outstrips supply. If the microfinance sector has to grow and meet the potential demand, private investment is but necessary. In this context, commercial microfinance serves both objectives: one, it serves the poor, and two, it fetches a return for the investor. This book introduces the new paradigm of 'commercial microfinance', examines the emerging trends and challenges in commercial microfinance, and presents case studies on implementation of commercial microfinance.