Why Sanghamitra is Different

This paper aims to explain:

• The ways in which the microfinance institution (MFI), Sanghamithra, is different from other MFIs Queries and criticisms related to micro credit/finance, such as:
• • Why did Myrada, a non-government organization (NGO), decide to set up a separate MFI Sanghamithra  instead of lending money itself?
  • Do NGO-MFIs have the ability to provide the full range of financial services?

The paper also answers the following criticisms of NGO-led MFIs:

• They tend to adopt a minimalist approach of only credit?;
• They only achieve consumption smoothing and not true enterprise development.

The author attempts to describe Sanghamitra's and Myrada's efforts to:

• Keep their identities so that their respective missions are not compromised, and at the same time, to share a common vision;
• Embed credit in a broader supportive framework of service providers and investment that has the potential to lift the poor above the poverty line.

The paper states that the NGO and the MFI can be closely meshed so that they can balance social concerns, while promoting a loan portfolio that increases income.It concludes by listing the following principles of Sanghamithra and Myrada that make them different:

• Credit is critical but can be absorbed productively only within a larger development context;
• Sanghamithra does not have to become the single-source agency for all financial services;
• Growth in the size of loan portfolio is not the major driving force;
• It is necessary to create competitive conditions.