The article discusses development planning in Nepal. On the basis of the UNDP 2001 report, Nepal is among the poorest countries in the world. It started implementation of the first five year development plan in 1956. The one strategy Nepal has been following to combat poverty is the use of microfinance as a tool to improve the socio-economic situation of the poor. The article gives a brief overview of the development of credit programmes in the rural areas of Nepal. It includes a diagrammatic representation of socio-economic implications of welfarist microfinance programs on the poor, socio-economic implications of institutionalist microfinance programs on the poor, and conceptual framework of the socio-economic implications of an alternative microfinance program model on the poor. It also includes a statistical analysis of the implementation of these programs.(Rajeev Ranjan Singh 2006-10-06)