Micro-finance is an idea which occurred to developing countries considerably late in the day. When during the colonial era, the modern sector and its peculiar institutional framework emerged in the South Asian continent, the system catered to the needs of the modern sector i.e. trade and industry. Agriculture did not receive the kind of attention that it deserved although colonial rule was responsible for destroying the viability of this vital sector. A compensatory effort to provide finance for the rural sector would have been in order. However, this task was left to the cooperatives and informal sources of credit. The governments in the colonial system only undertook “distress lending” in the form of Taccavi loans on a somewhat limited scale.