Sangwan, Navjot and Saha, Bibhas (2026) Caste and credit: discrimination in India’s credit sector. Progress in Development Studies. ISSN 1464-9934 (Print), 1477-027X (Online) (doi:10.1177/14649934251411694)

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Abstract

This paper examines how caste shapes access to credit in India’s formal and informal lending markets. Using nationally representative data from the India Human Development Survey (2011–12), we analyse loan application rates and loan amounts and compare outcomes between General Castes (GC) and three lower caste groups: Other Backward Castes (OBC), Scheduled Castes (SC), and Scheduled Tribes (ST). We find that GC households are more likely to apply for and receive larger loans from formal banks, while lower-caste households rely more heavily on informal moneylenders. A substantial share of these credit gaps - particularly in bank lending - remains unexplained by observable characteristics, pointing to potential caste-based discrimination. In contrast, moneylenders do not appear to penalise lower-caste borrowers to the same extent and, in some cases, lend more than expected to OBC households. These findings suggest that entrenched caste hierarchies continue to influence credit access in India, with formal institutions reinforcing rather than correcting social inequalities.

Item Type:	Article
Uncontrolled Keywords:	caste discrimination, credit, Blinder–Oaxaca decomposition, quantile decomposition, India
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HC Economic History and Conditions H Social Sciences > HG Finance
Faculty / School / Research Centre / Research Group:	Greenwich Business School > Political Economy, Governance, Finance and Accountability (PEGFA) > Greenwich Political Economy Research Centre (GPERC) Journal of Economic Literature Classification > Political Economy, Governance, Finance and Accountability (PEGFA) > Greenwich Political Economy Research Centre (GPERC) Journal of Economic Literature Classification > Greenwich Political Economy Research Centre (GPERC) Greenwich Business School Greenwich Business School > Political Economy, Governance, Finance and Accountability (PEGFA) Journal of Economic Literature Classification > Political Economy, Governance, Finance and Accountability (PEGFA) Greenwich Business School > School of Accounting, Finance and Economics
Last Modified:	19 Jan 2026 15:40
URI:	https://gala.gre.ac.uk/id/eprint/52302

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