Microfinance is an important tool in alleviating Poverty from Society. A Microfinance institution will be considered Successful if there is development in the Society as a result of the services provided by the institution. There are generally two main schools of thought with regard to the objectives of Microfinance institutions, namely “Institutionist” and “Welfarist”. According to the “Institutionist” School, a Microfinance institution should aim to increase its business and operation size. The bigger it grows, the greater will be its access to the poor. It should ensure the recovery of the Loans advanced to borrowers through the use of collaterals. The growth, profitability, and sustainability of the Microfinance institution are considered the key indicators of Success and achievement of the objectives. Nonetheless, this approach is strongly criticized by the “Welfarist” School whose adherents believe that there is a significant difference between institutional growth and societal development ؛ and that the former should not be taken as an indicator of the latter. While institutional growth is argued to be more related to the development of the institution itself, the level of societal development achieved is to be observed in the Society. Therefore, if the institution is not growing and is not sustainable per se, yet it is bringing a positive change in Society then, according to the Welfarists, this should be taken as a measure of Success. Accordingly, improvement in the overall welfare of the poor is argued to be the real indicator of Success of a Microfinance institution. It is observed that the Welfarist approach is similar to that adopted under the Islamic moral economy framework, which likewise targets the welfare of the disadvantaged classes in Society. The institutions of zakÉh (poor due), Bayt al-MÉl (state treasury) and waqf (endowments) are a manifestation of the means prescribed by Islam to achieve this objective. However, there is another important tool for fulfillment of this objective: qarÌ Íasan (benevolent loan). This has been mentioned in the Qur’Én and further emphasized in the Sunnah of the Prophet (peace be upon him) and by ijmÉÑ (consensus). It is a contract that can significantly help in Poverty alleviation and financial inclusion