OBJECTIVE: Recently, a novel community health programme-the integrated microfinance and health literacy (IMFHL) programme was implemented through microfinance-based women's only self-help groups (SHGs) in India to promote birth preparedness and complication readiness (BPCR) to improve maternal health. The study evaluated the impact of the IMFHL programme on BPCR practice by women in one of India's poorest states-Uttar Pradesh-adjusting for the community, household and individual variables. The paper also examined for any diffusion of knowledge of BPCR from SHG members receiving the health literacy intervention to non-members in programme villages. DESIGN: Quasi-experimental study using cross-sectional survey data. SETTINGS: Secondary survey data from the IMFHL programme were used. PARTICIPANTS: Survey data were collected from 17 244 women in households with SHG member and non-member households in rural India. PRIMARY OUTCOMES: Multivariable logistic regression was used to estimate main and adjusted IMFHL programme effects on maternal BPCR practice in their last pregnancy. RESULTS: Membership in SHGs alone is positively associated with BPCR practice, with 17% higher odds (OR=1.17, 95% CI 1.07 to 1.29, p<0.01) of these women practising BPCR compared with women in villages without the programmes. Furthermore, the odds of practising complete BPCR increase to almost 50% (OR=1.48, 95% CI 1.35 to 1.63, p<0.01) when a maternal health literacy component is added to the SHGs. A diffusion effect was found for BPCR practice from SHG members to non-members when the health literacy component was integrated into the SHG model. CONCLUSIONS: The results suggest that SHG membership exerts a positive impact on planned health behaviour and a diffusion effect of BPCR practice from members to non-members when SHGs are enriched with a health literacy component. The study provides evidence to guide the implementation of community health programmes seeking to promote BPCR practise in low resource settings.