This paper studies the changes in balance sheet composition across both extensive and intensive margins between 2002 to 2012, allowing for heterogenous effects of year and regional banking sector development by household occupation type. We explore the effects of rapid financial sector expansion on household balance sheets. On a methodological level, this paper aims to emphasize the importance of the study of constructed household balance sheet from household level data to understand the residual impacts of all economic decisions that appreciate, leverage or depreciate household wealth. On average, household wealth has grown handsomely over the decade but very little is accumulated in financial assets. There is a huge and significant increase in bank account ownership but only negative or no effects overall in relative allocation in financial assets and asset leverage. On the liabilities side, we see a decrease in the value and volume of loans from institutional agencies and an increase in the value and volume of loans from non-institutional agencies. The results depict that there has not been any significant shift towards formalisation of financial services by Indian households and highlight deviations from the expected financial behaviour of Indian households post a decade of policy interventions dedicated to drive such formalisation.
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