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Informal local governance institutions (ILGIs) are prevalent at the village level in rural India. Generally perceived by urban Indians to be ‘oppressive’, ILGIs also have progressive features and often perform a range of useful collective functions at the village level. Instead of fading away in the face of modernity, ILGIs have found ways to interact, often in a positive manner, with the newer, elected local government institutions, the Grama Panchayats. Based on field research in Karnataka state, this article tries to present a more holistic picture of ILGIs, including their role in village governance and service delivery; the ways in which they interact with Grama Panchayats, and the implications of their existence and role for local democracy. It also presents a tentative theoretical framework towards explaining why ILGIs in Karnataka particularly, and in India generally, seem to be less repressive, more functional and more likely …