This also explains why banks do not lend to the poor. Bank officers are not very well placed to do all the necessary due diligence: They don’t stay in the village, they don’t know the people, and they rotate frequently. Respectable banks are not in a position to compete with Kabuliwalas. They cannot easily threaten to break people’s kneecaps or even send them eunuchs. The Indian branch of Citibank got into serious trouble when it was discovered that it was using “goondas” (local hooligans) to threaten borrowers who did not repay vehicle loans.
