Vol. 7, Issue 1, Part D (2025)

This study addresses the disconnect between nominal and substantive financial inclusion among tribal households in Kerala’s Wayanad district by investigating why, despite 94.8 % bank‐account penetration under schemes like PMJDY and MGNREGS, over 60 % of these communities continue to rely on high‐cost informal credit sources. Filling a critical research gap in the literature on financial vulnerability, it introduces the Tribal Financial Empowerment Loop (TFEL) a model to explain how supply‐driven account proliferation coexists with demand‐side barriers—low financial literacy, procedural complexity, and mistrust—that keep most accounts dormant. A mixed‐methods analysis reveals that the households access formal credit with stark inter‐tribe variation, while moneylenders, SHGs, and relatives meet the remainder of credit needs. Building on these findings, the paper recommends culturally tailored financial education, proximity banking via mobile vans and local agents, small‐ticket microloans aligned with tribal livelihoods, and formal-informal linkages that accredit trusted moneylenders as regulated microfinance agents. By emphasizing active usage metrics—transaction frequency, product diversity, and community feedback—the proposed interventions aim to transform account ownership into genuine economic resilience and reduce exploitative debt cycles among Wayanad’s tribal population.