3. Why do poor people not go to a traditional bank?

Low income people usually can’t access loans from the formal financial sector. Bank branches are far away, banks ask for physical collateral that poor people don’t have, poor people have difficulties in filling in the complex forms or bank employees do not believe in the creditworthiness of poor people, do not take them seriously. A bank considers the risks of lending to poor people just too high. Furthermore, poor people can not save with commercial banks because their deposits are small and considered too expensive to collect.