Microfinance (MF) had been functioning in many parts of the world for several centuries. However, it comes into greater attention and started to get outstanding growth only from 1970s, since when MF has perceived as an effective tool for poverty alleviation. Thus various donors as well as governments started to subsidise micro finance institutions' (MFIs) heavily. But after decades of heavy support, recentimpact studies on MFIs have been exhibiting lower than expected performance of the sector.In practice, three major procedures of experiment has commonly been followed for impact study, namely, experimental design, quasi-experimental design and non-experimental design. None of these procedures comes up with any conclusive evidence of poverty alleviation directly brought by the MFIs. Moreover, by relying on subsidy many MFIS remain non-resilient and inefficient. However, depending on impact studies solely to justify MFI subsidy is not sufficient as MFI supposedly play a great role in developing financial system and inclusion where traditional financial institutions are not viable. This paper dealt with these extended roles of MFI based on the extensive literature review.It is evident that for sustainable development in financial system of the developing countries, heavy subsidy to MFI industry should be revised and minimized, rather a more market-based framework should be implemented to bring efficiency, innovation and accountability. Among various market-based financing source, general equity and socially responsible equity investment could be the viable alternative for MFIS. Because equity investment eventually transfers the low-cost fund (needed for sustainability) as well as control (essential for achieving efficiency and innovation) over the MFIs. This research can be extended to empirical study of financial viability of MFIs without subsidy in the future.