Microfinance has emerged as a world-wide tool for poverty alleviation. Haryana has been chosen as the sample state for this study as a number of microfinance projects and schemes have been initiated by both government and non government organizations for the promotion of microfinance. The programmes have not gained the desired momentum and results are far below desirable levels and Haryana is still grappling with the development of backward districts like Mewat. This is therefore the right time to investigate the reasons for the underachievement of targets of various schemes under microfinance. The purpose of this paper is to identify the variables and their interrelationships causing shortfalls in the desired impact of microfinance schemes or leading to underachievement of targets. The interrelationships of the variables have been derived using interpretive structural modelling