Microfinance alludes to little reserve funds, credit and protection administrations stretched out to socially and economically hindered sections of society. Microfinance gives financial items and administrations to masses particularly oppressed and burdened individuals at a reasonable terms and conditions. Throughout the years it has risen as an integral asset for financial incorporation in India. Financial consideration is another worldview of monetary development that assumes significant job in heading out destitution from state like Bihar. Financial incorporation is the top need of any creating or in reverse state like Bihar as far as monetary development and headway of society. It empowers to diminish the hole among rich and destitute individuals. Nearness of sound financial framework is an image of the powerful mainstay of development, monetary flourishing and in general improvement of any economy. The present examination means to inspect the effect of microfinance on development of the state economy over a time of ten years. Optional information has been utilized which has been investigated by different relapse model as a primary measurable device. Aftereffects of the investigation discovered negative and irrelevant effect of all out customer effort and credit development of microfinance on the GSDP of the Bihar, while Total reserve funds development was found to have positive and huge effect on the GSDP of Bihar. Thus, to have microfinance effect obvious on the state economy all recommendation recently prescribed by NABARD ought to be taken just as appropriate guideline ought to be brought to give different types of MFIs like NGOs, Trust, Societies ( with the exception of NBFCs) a more prominent task to carry out.