It is against a background of failure of the conventional development strategies in reaching poor rural households that the alternative development models of alleviating rural poverty were born. Most of these efforts were initiated mainly by concerned social scientists, academics and non-government organizations and have put into practise the concept of "Another Development". One of the most successful examples is the Grameen Bank of Bangladesh, which is a distinct target-group approach and exclusively designed for very poor rural households through the provision of credit as an entry point towards combating poverty. Such credit (or loans), it is argued can develop the productive capacities of the poor and are provided on reasonable terms and conditions to be used exclusively for financing income generating activities. The GB model is very successful and has spread farther afield and has been seized upon as a potential model for transfer and replication not only in developing countries, including Malaysia, but in the developed world. Since the Malaysian New Economic Policy in the early 1970s, enormous resources (physical, institutional and financial) have been committed towards the eradication of poverty. Despite these efforts, poverty, especially hard-core poverty, remains an inherent problem, notably in rural areas. In view of this, the Ikhtiar Programme, implemented by a private organization modeled after the Grameen Banles approach, stepped in and offered a viable alternative which complements the Government's poverty alleviation programme. Basically, the Ikhtiar Programme seeks to provide small loans on reasonable terms to very poor rural households to finance income generating activities. It is a targeted, specialized delivery system, focussing exclusively on the poor, taking loans to the poor through an approach based on self-realization and collective responsibility among the participants. The purpose of this study is to examine to what extent the Ikhtiar Programme has been effective in raising the incomes after the utilization of Ikhtiar loans among its participants, The study is based on a case study in the district of Baling, in the state of Kedah. This study is based on household surveys of selected respondents, including 254 programme participants and 265 non-participants (control group). It aims to provide some suggestions which might be helpful in future planning and implementation of broad-based poverty alleviation programmes. The findings of this study suggest that the Ikhtiar Programme has succeeded in reaching its target group in the study area, which consists overwhelmingly of members who had a low housing index and low household income. It has also succeeded in improving the economic conditions of its participants. This has resulted in a further positive impact on the quality of life of its participants, shown through changes in housing conditions, household items owned, household expenditures and savings. The findings of this study also provide valuable lessons that can be incorporated into the planning and implementation of more conventional rural development programmes. The implementation of the programme has some very important implications for national development policy, which include policies relating to poverty eradication, promotion of rural industry, national agricultural policy and others.