This study aims to provide empirical evidence of the determinants of loan allocation, the severity of credit rationing, and the role of social norms in group lending methodology with joint liability adopted in a microfinance program (Self-Help Group program) of South India. To do so, we conduct an artefactual field experiment to capture social preferences of program participants. Experimental data are then combined with financial data collected from individual and group financial diaries in which bargaining processes in deciding who borrows indeed in each loan cycle are explicitly recorded. Four main empirical findings are confirmed. First, in a demand-side decision-making, participants with lower permanent income and savings in bank accounts are forced to abandon to apply microloan in their financial groups since they are afraid to be rejected their application by group members and/or fear to lapse into a default (i.e. demand-side rationing). Therefore, applicants' income and an amount of savings play a role as implicit collateral to screen borrowers. In addition, if other applicants in the same loan cycle hold higher political positions, potential applicants decide to step away from borrowing loans. Second, regarding the effects of social norms, while altruistic potential borrowers tend to be reluctant for applying loans, trusting and cooperative participants reveal the opposite behavior. Third, in a supply-side decision-making, each group acting as a lender optimally allocates microloan in such a way as to minimize the probability of defaults of borrowers by screening out applicants in accordance with permanent income (i.e. supply-side rationing). Fourth, a traditional social norm or noblesse oblige, however, persuades group members to permit the poor to borrow even though this impairs an efficiency of loan allocation.