Pakistan Journal of Social Sciences (PJSS) Vol. 35, No. 2 (2015), pp. 1061-1072 Impact of Microfinance on Poverty: A Case Study of PRSP, Pakistan Ali Azam Lecturer, Department of Economics, The Islamia University of Bahawalpur, Pakistan Toseef Azid, PhD Professor of Economics, Bahauddin Zakariya University, Multan Abstract This study explores the effectiveness of microfinance institutions in Pakistan to knock the door of target population. For this purpose, Punjab Rural Support Programme (PRSP), Punjab (Pakistan) has been employed as representative institution of microfinance. Data was collected through a comprehensive questionnaire from 476 borrowers of PRSP with the help of pure random sampling technique. A disaggregated ratio analysis was applied to the collected dataset to find the socio-economic status of respondents. Thereafter, under the multidimensional non-welfarist approach of poverty, it has been tried to classify the respondents’ status and to find out the questioned effectiveness of the institution. This study puts its evidence in favor of proponents of theory mentioning microfinance institutions to reach the deprived segments of the society. Keywords: Microfinance and MFIs, Poverty, Ratio Analysis I. Introduction The objective behind foundation of Microfinance Institutions (i.e. MFIs) is the poverty mitigation. If MFIs fail to reach the poor segment of the society, the justification of its poverty reduction will certainly be gone astray. Till now, most of the evidences show that public and private institutions working for micro financing are not successful to reach the target group [Zeller et al (2002), and Weiss (2005)]. Hickson (1997) points out that innovative tools are required for effectiveness of MFIs to reach the deprived. On the other hand, Barua and Sulaiman (2006) assert success of MFIs and declare the programme capable to concentrate the target population. Even in success cases, the effectiveness is observed to be “Mission Creeping” (Mouduch and Haley, 2001). However, general consensus for effectiveness of MFIs to reach the poor communites tilts in favour of its opponents. This study also explores the issue of effectiveness of MFIs to reach the poor and attempts to explore the evidence from Punjab province of Pakistan. In Bangladesh, the issue of location decision of NGOs was explored by Gauri and Frutter (2003). The study highlighted two major types of accounts in NGOs working for service delivery: Opportunistic and Benevolent. Opportunistic account worked for institution and Benevolent account considered service delivery. The location decision depended upon the chioce of NGO in choosing the account type. Assessment analysis of