Microfinance and Mission Drift: Navigating the Ethical Tensions Between Financial Self-Sufficiency and Poverty Alleviation

Indian Microfinance Institutions (MFIs) have historically worked towards generating social benefits through activities aimed at poverty reduction and financial inclusion, while maintaining financial stability. However, growing commercialisation and structural transformation within the sector can lead to mission drift, the gradual departure of an organisation from its founding social objectives. Through comparative case studies of SKS Microfinance, CreditAccess Grameen Ltd, Bandhan Bank and SEWA, this paper examines how institutional transitions, from NGOs to NBFCs or universal banks, impact client targeting, lending practices, and governance priorities. Findings suggest that organisational structure plays a key role in either safeguarding or undermining mission integrity. This study highlights the tension between financial sustainability and poverty outreach, offering insights for policymakers, social investors, and MFI leaders on how to preserve social purpose while scaling operations in competitive markets.