Muthoot wants to take chit fund pan-India, reach out to millennials and executives

Despite being a convenient product offering the benefits of savings and credit, chit fund has hardly penetrated among the youngsters and still remains an old-world financial instrument. Muthoot Pappachan Chits wants to reach out to the millennials and corporate executives by offering digitized service. It aims at becoming a pan-India player in a highly unorganised segment with a few organised regional players.

Muthoot Pappachan Group had revived it chit fund business in 2012 after a gap of more than 25 years once the government made it mandatory for the sector to comply with the Central Chit Fund Act. After operating in Kerala for these past six years, now the company thinks it is time to expand across states and become a pan-India brand.

“Chit fund is a very convenient product that offers the benefits of both savings and borrowing and is very useful for emergency lending. Due to inadequate regulations, the business has remained in the unorganised sector for so long. There are only a few regional players operating in one of two states. We want to be a pan-India player and take this product to non-traditional customers, including the millennials, corporate executives, high net-worth individuals and senior citizens,” said Roy John, business head and vice president, Muthoot Pappachan Chits (India).

The company will leverage the brand value and pan-India presence of Muthoot Pappachan group, which has over 3600 touch points across the country. In order to reach out to the younger professionals and corporate executives, the company has digitized its services and has come up with a corporate marketing channel.

“We are one of the very few companies in this business to offer a completely digital on-boarding process. Multiple security options including pledging of gold, enhanced customer touch points, optimisation of mutiple sourcing channels to diversify customer profile mix etc. are the other factors which further fuel our growth engine. Digitisation of both the front and back end has helped us reach out to the younger and millennial customer base and do business more transparently,” said John.

He looks forward for a few amendments in the Chit Fund Act that will enable auctioning through video-conferencing. “A well-diversified customer profile will help our profitability. Further, the central government is also looking at increasing the commission for the chit fund operators from 5 per cent to 7 per cent,” he said.

The company has already started operations in Karnataka and Tamil Nadu and this year will be operating in all the southern states. By next year it plans to expand to other markets as well. From the current business size of Rs 300 crore, the company is aiming at a 10-fold growth to Rs 3000 crore in three years.