Examining mission drift in client targeting among Indian for‐profit microfinance institutions: A multidimensional approach

Abstract

The article examines the incidence of mission drift among the Indian for-profit microfinance institutions (MFIs) and identifies its underlying factors. The results indicate the possibility of mission drift among the MFIs in their outreach. The MFIs are inclined toward wealthier, younger, and non-agricultural clients, having longer loan experiences and greater social networks. Loan diversion and women's passive role emerge as yet other critical challenges. The interest rates are higher for the smallsized loans, indicating the poverty penalty. The financial sustainability with profitability seems to be at the core of the outreach among the for-profit MFIs, which may be a serious setback to the goal of poverty alleviation.

Explorations Into Loans Granted To Microfinance Institutions By Financial Entities: Observations From The Indian Context

“…However, it impact in the macro level in the vast inclusion of both the urban-rural marginalised class cannot be over showed by narrowing its characteristics only to the rural regions (Saqfalhait, 2019). With the uncollateralised small loans to micro-enterprises, it brings in a doubt on the outreach of the microfinance institutions (Swangwan & Nayak, 2020). (Lensink and Hermes, 2007) found out that the amount of loan disbursed to microfinance institutions and the financial strength of the microfinance institutions plays an important role in its sustainability.…”

Key Determinants of for-Profit Micro Finance Institutions Credit: A Study on Rural Manufacturing Households

“…In fact, many for-profit MFIs, like SKS Microfinance Ltd and Ujjivan Financial Services Ltd, Equitas Holding Ltd, etc., were NGO MFIs in their earlier avatars (Pati, 2021). As a result, the share of for-profit MFIs has increased considerably over the years, whereas it has been the opposite for not-for-profit MFIs (Sangwan & Nayak, 2021). If we focus only on notfor-profit and for-profit MFIs, as per computed figures from the Reserve Bank of India (RBI) (2011), in 2007-08, SBLP (i.e., not for-profit MFIs) accounted for around 78% and 74% of microfinance borrowers and their outstanding loan amounts respectively.…”