Patterns of Access to Microfinance Loans in India

Abstract Due to various supply and demand factors, households in developing countries may borrow from a single source or combination of sources—formal, informal and microfinance institutions (MFI). Who is accessing what types of loan sources? This study uses Indian Human Development Survey (2011–2012) to analyse, for the first time, households accessing microfinance loans either alone (8%) or in combination with other sources (13%). We find that the more developed southern states have the highest MFI-linked borrowers (39%). Despite the low overall share of MFI borrowing, microfinance supports inclusiveness with higher presence among the economically disadvantaged and socially underprivileged, such as female-headed, casual labour, Other Backward Classes and dalit households. Expectedly, the effects of social networking are more pronounced among MFI-linked borrowers.