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ABSTRACTThis exploratory study was conducted to examine the reasons behind credit defaults in Self‐help Group‐based microfinance programs in India. The study adopted the mixed‐method approach. Focus group discussions (FGDs) were conducted to collect information, and thematic analysis was followed to analyze data to identify the possible causes of loan defaults in self‐help groups (SHGs). Further, 120 defaulting and 120 performing SHGs were selected through stratified random sampling method. Finally, 960 respondents were randomly selected from 240 SHGs to collect information for quantitative inquiry. The ordinary least square (OLS) and probit models were engaged to process the data. This study identified three important attribution sets causing credit defaults, (i) bank‐related attributes, (ii) agency related attributes, and (iii) group dynamics. The probability of defaults in SHGs was predicted by the amount of loan disbursed by bank, agency's help in enterprise development, age of the microenterprise, microentrepreneurship of the SHG member, SHG visits to the bank, members dropped out from SHG, tenure of the president and secretary, and monthly membership saving in the SHG.