Microfinance-SHG model has got tremendous attention in recent years, which is an alternative source of credit for the poor particularly in rural area, who earlier were considered as non-bankable. This system not only provides credit, most important input for development to the poorer section of the society, but also aimed for their capacity building. It has also been observed that group lending has distinct advantage in the form of excellent recovery rate and improvement in income level. The phenomenal growth of the SHGs indicates that the weaker sections of the society are also capable to sharpen their micro-entrepreneurial skills with the help of their own savings and additional bank credit as needed. At this point, microfinance - SHGs integration could be the way out for overall rural development vis-a-vis poverty alleviation.