Microcredit groups have a worldwide presence today due to the popularity of microfinance programs as a development intervention. During the period of microcredit’s rise, development discourse and research has also seen increasing attention focused on “social capital.” This paper is an attempt to identify mechanisms linking religious composition of microcredit groups and their social capital, defined in this paper as the capacity for collective action of the kind required for achieving conventional public goods and “participatory public goods” (those general benefits that can be attained solely through voluntary cooperation/ mobilization). This post-factum identification is based on analyzing qualitative data from real-life cases in India of collective action and sanctioning (to protect women) undertaken by Hindu microcredit groups, and the absence of collective action in Muslim microcredit groups. The paper makes a theoretical contribution by furthering our understanding of emergent inequality in social capital, i.e., unevenness in the way social capital resources and benefits accumulate among different communities and groups of people.