Since the size of transactions by the poor, or by micro farmers or enterprises is small, the fixed costs in transacting are relatively high. It takes as much time helping a client fill out the forms and to provide the necessary documentation if he is applying for a loan for Rs. 10000 as it takes to help another one borrow Rs. 10 lakhs.
A banker who is conscious of the bottom line would naturally focus on the large client in preference to the tiny one. How does the moneylender manage? One of the primary motivations for the country to push financial inclusion is to free the excluded from the clutches of the moneylender. How does the moneylender boldly lend where no banker dares to lend?