Kudumbashree is the women empowerment and poverty eradication programme framed and enforced by the State Poverty Eradication Mission (SPEM) of the Government of Kerala. Financial inclusion is the delivery of financial service at affordable cost to sections of the disadvantaged and low income segments of society. Kudumbashree acts as an aid for the economic development of women, economic security and the financial betterment of women of a specific region. Microfinance is the primary activity of kudumbashree which is the binding force of neighborhood groups. The main objective of the study is to analyze the impact of kudumbashree units on financial inclusion and the usage of modern banking services by the kudumbashree members. The result shows that after joining kudumbashree their access to banking service has increased. Most of the members feel that their financial status has improved after becoming a kudumbashree member. Kudumbashree plays an important role in financial inclusion since the management of kudumbashree is a professional one and it is acclaimed as a model scheme.