Furthermore, the costs of operating branches in rural areas are large relative to the rather limited volume of revenues which can be generated from these branches, especially as many of the basic requirements of operating a bank, such as the provision of electric power, are more expensive in rural areas than in urban areas.
Serving the financially excluded may also entail higher risks for financial institutions, because the poor have fewer resources to cushion themselves against adverse shocks and fewer assets which can serve as collateral for loans than wealthier customers have.