Mission Drift in Microfinance: Lending Money or Serving People?

Microfinance was born with a clear purpose—financial inclusion for the poor, especially women, who were excluded from formal banking. It promised empowerment through access to credit, enabling micro-enterprises, household stability, and community resilience. But somewhere along the way, that mission blurred.

As the sector grew, so did its profitability. Investors arrived, scale became the new goal, and MFIs started resembling mainstream financial institutions. Profit motives began clashing with the original purpose of serving the underserved. In some cases, aggressive growth led to over-indebtedness and coercive recovery practices—damaging trust and community well-being.

Ethical lending, good governance, and fair client treatment are the backbone of responsible microfinance. But these aren’t always rigorously followed. The lack of transparency, insufficient grievance redressal, and inconsistent adherence to codes of conduct have raised questions about whether MFIs are drifting too far from their social mission.

Self-regulation is crucial. The sector must hold itself accountable—not just to regulators, but to its own founding ideals. Strong internal codes, peer reviews, transparent impact assessments, and responsible lending standards can help preserve the sector’s credibility. If MFIs forget why they exist, they risk becoming what they once aimed to disrupt: another arm of extractive finance.