Despite of all the positive developments that are taking place in the microfinance sector, there are certain challenges and problems that the microfinance sector needs to deal with in order to operate on a fully productive basis. As Pakistan is a country which has an agriculture-based economy, majority of our labour force (that is about 67.1 percent of the total labour force) with few education and opportunities to cope up with the increasing demands of life. The lack of awareness that these people have about the opportunities in the microfinance sector is another challenge that it needs to deal with. Another challenge that stands intact in its place is the wide gap of income inequality in between the rich and poor classes that has amplified even more in the most recent years. As for the loans that are being taken by the poor households, those are generally for consumption purposes rather than investment purposes, reflecting the scarcity of resources. In the reflection of all these problems, the prospect of developing basic necessities for the masses such as educational institutes, hospitals, roads, access to markets would be a much more productive strategy rather than providing mere loans.