One of the key determinants of access to financial services is branch density as loan-making depends on information that necessitates local presence. This paper hypothesises that the proportion of Muslim population has an inverse relationship with branch density in India. The hypothesis is tested using data on commercial bank branches from the Reserve Bank of India and census data. The ordinary least squares estimation shows the expected negative sign for the coefficient of Muslims and the positive sign for the level of urbanisation, both being statistically significant. Commercial bank loan rates are related to the proximity to branch offices, wherein lower branch density not only affects the Muslims (who voluntarily do not participate) but also the general population with serious implications for financial deepening and welfare.
