This research examined the Institutional efficiency of Islamic vs. Conventional Microfinance institutions by using DEAP analysis. Non-parametric statistics for 11 years (2005-2015) has been used to observe what and how much impact these two institutions caused in reducing poverty from the Korangi town Karachi by using visual inspection technique and log-log OLS model. The data was collected through self-structured questionnaire while secondary was gathered from financial reports of Khushhali and Akhuwat from the year 2005-2015. The study results of DEAP , OLS and Financial Ratio analysis were significant and concluded that Akhuwat (Islamic Institution) is technically and financially efficient microfinance institution and casting significantly positive impact in alleviating poverty from the Korangi town (area under study) as compared to Khushhali bank (conventional institution). The study suggests that Government may support and promote the pure Islamic microfinance institutions in order to reduce poverty further from the society. Supervisor:- Dr Usman Mustafa