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SAARC has an ambitious charter for regional cooperation and regional integration with an emphasis on trade and economic relations, socio-economic development, eradication of poverty free trade zone, education, health care, countering terrorism, and disaster management. SAARC has also established institutional infrastructure to pursue cooperation in the areas of mutual interest. However, the performance of SAARC has been below expectation. Bilateral and regional trade is limited and cooperation in other areas is either poor or negligent. The major reason for the poor performance of SAARC is geographic imbalance in terms of size, population economic, resources, industrialization and military power. It is an India centric region and India has often used its advantages to keep the smaller states of the region under diplomatic and military power. Consequently a strong element of mutual distrust is noticeable in SAARC meetings and in their bilateral interaction. On more than one occasion SAARC summit conference had to be postponed because India refused to participate in the conference if it is held in Pakistan. Despite the difficulties of SAARC, it has the potential to become an active and result-producing regional organization. India needs to be magnimous towards other states. India and Pakistan should resolve their bilateral problems so that they participate in SAARC without reservation. If India Pakistan issues are resolved or managed properly, SAARC can become a more active organization. This will benefit all people and governments of SAARC area.