The success of microfinancing methodology, as a development tool for poverty alleviation, has been accompanied by a number of challenges. These challenges have resulted in increasing concerns about performance of those entities that act as vehicles for delivering microfinance, i.e. the microfinance institutions (MFIs). A major problem in this regard relates to selection of appropriate technique/s for evaluating MFIs’ performance. Data Envelopment Analysis (DEA) is an established nonparametric methodology that has been used to assess the performance of MFIs. This study proposes a significant extension to standard DEA models. This is achieved by the identification of various trade-offs between the inputs and outputs and their subsequent incorporation in the DEA models. With this application, the current study contributes to existing knowledge in the field of operational research; by providing practical demonstration of the procedure, through which the trade-off approach can be used to enrich standard DEA models. The improvement to standard DEA models is accomplished through incorporation of additional information, in the form of technologically realistic trade offs. In addition, application of the trade-off approach is shown to help in overcoming the problem of insufficient discrimination; resulting from having a relatively small number of DMUS, in comparison to the total number of input and output variables. The current study also proposes a framework for DEA-based performance evaluation of MFIs. This framework acknowledges the need to evaluate both the social and financial dimensions of MFIs, in order to achieve a more holistic view of their performance. For this purpose, the social and financial performance aspects of a group of MFIs’, working in an under-researched economy, are analysed individually as well as simultaneously. A comparison of the efficiency scores is also used for investigating the conflict compatibility dilemma, which is a frequently discussed issue in the microfinance literature.