Self-help group (SHG) is a village-based financial intermediary usually composed of 10–20 local women. Most self-help groups are located in India, though SHGs can also be found in other countries, especially in South Asia and Southeast Asia. Microfinance improves the socio–economic status of the Self-help groups. The aim of microfinance program is to fulfil the financial needs of low-income groups with the help of banks and it leads to the development of Self Help Groups. Research studies on SHGs in the state reveals that these groups consisted of mostly 15-20 members mostly belonging to backwards areas of the society. SHGs in India have become a potential tool for the empowerment of women, social solidarity and socio-economic betterment of the poor in their own setting. This paper forms part of an analytical research study on the role of microfinance factors in the development of Self-help group in Tamil Nadu state. The study was conducted with a sample of 560 members of self-help groups belonging to different districts in Tamil Nadu, using multistage sampling and stratified sampling. It has been found that the factors influencing self-help groups are socio economic benefits, perception, gain availed, social security, social relationship with respect to microfinance. It is recommended that the resources should be utilised in the efficient way to develop self-help groups in the state.