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Gold finance  thomas muthoot
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Gold finance thomas muthoot


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  • 1. Gold Finance- Thomas Muthoot
  • 2.
    • COCHIN – Five hours north of Kerala’s political capital of Trivandrum, passing through mirrored chessboards of rice fields and palm-lined canals criss-crossing the terrain, is Kerala’s economic and cultural capital.
  • 3.
    • Cochin has been a hub of trade for centuries, linking the Greeks and Romans to the Chinese and later the Portuguese, Dutch, and British all hoisted their flags atop their spice ships in its serene harbor.
  • 4.
    • The lovely city also host’s Muthoot Pappachan’s corporate headquarters.
  • 5.
    • The Muthoot family and family of companies has been the backbone of financing Kerala’s economic and infrastructural development, dating back to when the region was known as the Kingdom of Travancore under the British Raj.
  • 6.
    • Today, Thomas Muthoot continues in his family’s legacy of economic development, especially for those who face barriers to entry restricting their financial inclusion.
  • 7.
    • I sat down with Muthoot FinCorp Executive Director, Thomas Muthoot, and COO Sadaf Sayeed to discuss their forays into the microfinance space, their current relationship with ACCION delivering Dialogue on Business to their clients, and the direction they envision for our partnership.
  • 8.
    • The Muthoot-ACCION partnership began three years ago, just as they were beginning their microlending business.
  • 9.
    • Another one of our industry’s “Big Six” (not ACCION) helped Muthoot Pappachan set up their microlening business. Once they were ready to lend, they needed to attract clients.
  • 10.
    • Entering a saturated market, Muthoot wanted to differentiate themselves from other MFIs.
  • 11.
    • Thomas saw two avenues and both have been met with initial successes. First, (I concluded an earlier post alluding to this avenue) since Muthoot cannot hold savings for their clients, they have found another unique way to generate savings for asset accumulation.
  • 12.
    • Enter the gold coin. They have devised a program where the borrower would pay a little extra each week in addition to her loan repayment, and at the end of the 52-week cycle, she will be issued 1g of gold.
  • 13.
    • Muthoot has streamlined their operations to the point where, even including the extra weekly payment, the effective interest rate the women pay is lower than their competitors.
  • 14.
    • In this way, the bank is helping their clients save for a desirable fungible asset, and the opportunity to reenroll in the gold coin program keeps them coming back.
  • 15.
    • The second avenue Thomas envisioned differentiation was through entrepreneurial training.
  • 16.
    • Enter ACCION. Sadaf began, “All this started as a CSR initiative of Muthoot.
  • 17.
    • Sthreejyoti training makes an effort to build our client’s skills and manage their businesses well.
  • 18.
    • This is what attracts and differentiates us from other MFIs”. Thomas followed, “Unlike other MFIs, we want to bring other valuations to our customers.
  • 19.
    • It’s not just giving money and getting it back on time. We want to give them support. In a way it helps us engage the customer at different times, other than the weekly collection time”.
  • 20.
    • He continued, “We want to ensure that, in the long term, we are seeing that they come up the ladder also.”
  • 21.
    • Essentially this one-two punch of the gold coin program to get the customer in the door and Sthreejyoti training helps Muthoot attract and retain business.
  • 22.
    • Both Thomas and Sadaf are anxiously waiting and working through the coming critical six months.
  • 23.
    • By the end of the year Muthoot and ACCION will finalize relationships, buy-back agreements, and other market linkages with NABARD (India’s national Development Bank) and ROPE as well as review the anticipated Dialogue impact assessment.
  • 24.
    • The coming NABARD linkage would ensure the Muhtoot is handholding their clients on end-to-end delivery; from loans to education to production to market.
  • 25.
    • More important, Muthoot is waiting on the assessment results to verify Sthreejyothi is truly making a positive impact. Sadaf stresses, “A study has to come out and show it’s a difference maker.
  • 26.
    • Thomas and I totally believe in this, but for other people (I was reading between the lines: investors, donors, policymakers, academics) to understand, there has to be a quantifiable number.”
  • 27.
    • Nonetheless, Thomas and Sadaf are very pleased with their partnership with ACCION for reasons beyond bringing Sthreejyoti to their clients and the ROPE linkage and envision their relationship becoming more meaningful and focused down the road;
  • 28.
    • for example, “Modifying the modules or delivery methodologies, Accion should be there. Or if we are targeting a new set of clients, artisans, a specific cluster of entrepreneurs, in those situations we will use ACCION’s expertise.”
  • 29.
    • Both Thomas and Sadaf were realistically prudential in their vision for the future of the program. Thomas envisions, “At least 5% of women becoming real entrepreneurs.
  • 30.
    • We have trained about 8000 women and it’s our hope that 500 would become successful entrepreneurs.” Sadaf continues, “A real entrepreneur means she is independent and can manage her business on her own.
  • 31.
    • We want to create and promote entrepreneurship. So if we saw at least 5% become real entrepreneurs, we have been a success.”
  • 32.
    • On that note I presented seven client stories, including some of my favorites like Munni’s beedie business , Usha’s hopeful expectation for a loan to scale up her chapati enterprise, and the sudsy Trivandrum -tragedy .
  • 33.
    • Sadaf will lead a feasibility study on market conditions and hopes to deliver Usha a chapati machine.
  • 34.
    • Thomas suggested the ladies in Trivandrum start a laundry service. His recommendation brilliantly summed up the type of creative and entrepreneurial thinking that Muthoot wants to foster in their clients: to work with what they have and Muhtoot will provide counsel along the way.
  • 35. Contact Us