The gesture is taken to signify that the person can break the finger of the one who broke the promise.
[1][2] In North America, it is most common amongst school-aged children or adults and close friends and has existed since at least 1860, when the Dictionary of Americanisms listed the following accompanying promise: Pinky, pinky bow-bell, Whoever tells a lie Will sink down to the bad place And never rise up again.
[3] Pinky swearing has origins in Japan from 1600 to 1803, where it is called yubikiri (指切り, "finger cut-off") and often additionally confirmed with the vow "Pinky swear, whoever lies will be made to swallow a thousand needles."
In Maharashtra (India), this concept similarly using Marathi calls this "Gatti fu".
There is also another pinky swear promise made between children in the Isle of Man.