A much deeper structural change that is sweeping the microfinance landscape is the transformation of NGOs into lending institutions. There is strong movement towards the transformation of NGOs’ promotional work in dealing with poor into commercial microfinance operations through variety of means. One such transformation is the conversion of MFI to NBFC.

The major issues arising from the development in microfinance sector during the year are: the potential for mission drifts in pursuit of vigorous growth, high risks are inherent in fast-paced growth of organizations that do not have adequate internal checks and controls, the aspirations of majority of NGOs to sectors to get transformed into MFIs and the impact it would have on savings by people in their groups, the heightened interest in urban microfinance and the resultant competition increasing the risks of MFIs and their funders.