Chettiar Community's Business Culture

1. 1Dr VK PDPU
Nattukottai Chettiars/
Nagarathars
What Marwari businessmen are to the north and Parsees to the west, the
Nagarathars are to the south…
https://www.business-standard.com/article/economy-policy/chettiars-struggle-to-bring-family-into-business-
113122601013_1.html
Often hailed as the pioneers of organised banking in the country and
credited with introducing of double-entry bookkeeping (debit and credit)
https://www.thehindu.com/features/magazine/chettiar-connect/article6730599.ece
The trusted financial intermediaries even for British and other foreign
banker’s way back even in the 1750s
https://www.deccanherald.com/content/55347/they-had-won-confidence-britishers.html

2. Individuals & Institutions
P. Chidambaram - the former finance minister of India
Padmabushan Alagappa Chettiar - 'Socialistic Capitalist' from Pandit Jawaharlal Nehru.
Raja Sir Annamalai Chettiar - remembered for founding of Annamalai University in
Chidambaram. He was also the director of Indian Bank, which he co-founded with his
brother Ramaswami Chettiar
M. A. Chidambaram Chettiar - started the Southern Petrochemical Industries
Corporation
https://alagappauniversity.ac.in/modules/theUniversity/aboutFounder.php
http://www.chidambaravilas.com/important-people-chettinad-shaped-history/
Business powerhouses like
Murugappa Group: https://www.murugappa.com/
Chettinad Group: https://www.chettinad.com/
AVM Studios: https://www.avm.in/
MA Chidambaram Group: https://spic.in/
2Dr VK PDPU

3. Geography
3Dr VK PDPU

4. 4Dr VK PDPU

5. Some of the
villages/towns
connected with
Chettiars/
Nagarathars/
Nattukottai
Nagarathars
5Dr VK PDPU

6. Some of the
COUNTRIES/REGIONS THEY
ADVENTURED
Sumatra
Saigon
6Dr VK PDPU

7. Chettiars/
Nagarathars/
Nattukottai
Nagarathars
7Dr VK PDPU

8. History
KINGDOM-GEOGRAPHY BUSINESS - CONSTRUCTIVE
YEARS
DISASTER & MIGRATION
Naganadu - This borders the
present state of Andhra Pradesh
and Tamil Nadu
Doing trade in precious stones –
equal respect like the king
Earthquake/harassment of the
Naga king
Kanchipuram - Tamil Nadu doing trade in precious stones -
land to build temples and mutts
King imposed unjustified severe
fines and punishments
Kaveripoompattinam-- Chola
kingdom - Tamil Nadu
Trading like salt, precious stones.
Three honourable rights including
the coronation of the king
Harassed and imprisoned all the
womenfolk.
Chettinadu - Tamil Nadu Money-lending and trading in the
various overseas countries such
as Malaya, Ceylon, Burma, and
Indo-China
Burma: Nationalisation of Lands,
Rice Riots
Ceylon: Rice Riots, Money lending
Ordinance
8Dr VK PDPU

9. Chettiars/ Nagarathars Characteristics
• Strict adherence to the community rules combined
with spirituality and simplicity made them an
interesting group
• Spirit of adventure and enterprise…natural
shrewdness…acts of magnificence
• The freedom given to the sons of the family in
terms of share in the family estate, investment and
management of business and funds, cooking etc
gives the man a sense of responsibility and
competition among his siblings.
• As an unwritten rule, they kept their families back
home, sent all their earning to their country and
made it a rule to come back to the family after
earning money
9Dr VK PDPU

10. https://frontline.thehindu.com/arts-and-culture/heritage/article25547717.ece/photo/2/
10Dr VK PDPU

11. http://www.natgeotraveller.in/chettinad-guide-magnificent-mansions-peppery-cuisine-and-antique-markets/
11Dr VK PDPU

12. http://www.natgeotraveller.in/chettinad-guide-magnificent-mansions-peppery-cuisine-and-antique-markets/
12Dr VK PDPU

13. WHAT WHERE WHEN & HOW
• The Chettiars who were maritime traders for centuries, turned towards moneylending -farmers became
the principal clients for the Chettiar firms-and merchant banking…small trading…rice, clothes, jewels
and gems etc. They even had a few Timber saw mills in Burma
• British India, South east Asian countries & Ceylon
• Particularly the opening up of the Suez Canal-1869 - Burma developed into the primary rice producer,
Malaya produced rubber and tin and Ceylon provided tea. With increasing world market demand for
these foodstuffs and raw materials, the demand for credit on the local money market to invest in
production and mining heavily increased and made Chettiar business boom.
• Colonial Government’s financial needs to develop the infrastructure and the conversion of wet swampy
forest lands of South east Asian countries into fertile agricultural lands needed a systematic funding
network. Hence, the money lending communities were encouraged in several ways to form this
network. The ever mobile and adventurous Chettiar community fitted into this profile as if specifically
designed for this mission. It was said that the Chettiars set sail to Burma and Ceylon along with the
Colonial troops !
• The chettiar business houses were based on their communal institutions, marriage alliances, blood
relations, family of descent and clan temples.
• https://shodhganga.inflibnet.ac.in/bitstream/10603/244923/1/01_title.pdf
13Dr VK PDPU

14. Business Culture
Without going for adopting the business methods of their new business places,
without learning the language of the people they do business with,
without getting accustomed to the culture of the soil,
without changing food habits or dress and
without changing religion or religious habits, (instead they built their own temples to keep
up with their rituals)
Chettiars have managed well in their business.
Where ever they were, they didn’t go for joint ventures or partnership with the sons of the
soil of other kingdoms or countries. Instead, they cooperated with the Kings and
governments to get their business established. This keeps their traditions intact even after
100s of years.
https://shodhganga.inflibnet.ac.in/bitstream/10603/244923/1/01_title.pdf
14Dr VK PDPU

15. Business Culture
Once, the agent earned enough of money and accumulated the necessary
capital, he became a separate banker and started his own firm. More often,
these new bankers were supported by the previous employer chettiar…not
treating him as competitor or not showing any bitterness but playing the
role of a parent banker and utilizing the opportunity to invest further.
The chettiars use the loan amounts drawn from the European banks to lend
money to the rural peasants, of course on security. In case of non-repayment of
loans by the farmers, the chettiar firm, in turn, might have faultered the
payment to the European bank. But, the Chettiar firm will draw another
short term loan from other chettiar firm and repay the loan on time. The
other chettiar firm who granted to this firm, in turn, will approach the European
bank for loan and adjusted the working capital deficit. If looked at properly, it
was actually the European bank money that was paid for the loan. This
insulated system of transactions kept the chettiar capital not faltering in
earning interest in at least any one firm.
Principle of the community – Multiplying the money. They never used the
capital money for expenditures and always kept aside a part of profit for re-
investment
Dr VK PDPU 15

16. • To cut down the cost of commission when the hundi gets to
many bankers, the second and third banker usually did not
discount any commission, thus saving the cost of the client.
This unique practice gave the clients a trust worthy feeling
on the chettiar banking operations that anywhere the
chettiar hundis will be respected in chettiar firms. Also the
spread of the chettiar banks in many places inside the
country in southeast Asia helped the clients to transfer
money irrespective of country and of worrying about
whether the bank will have a branch in that particular
country.
• The peace of mind of the employees who stays away from
family for three years was too taken care of, not only by the
employer but by the whole as a community
provided -safety and security.
• -
Dr VK PDPU 16

17. Dr VK PDPU 17
Entrepreneur
Source of
capital/Master
Client/Customer
Employee
Dr VK’s Design

18. Dr VK PDPU 18
Chettiar Business practices
https://shodhganga.inflibnet.ac.in/bitstream/10603/2
44923/1/01_title.pdf
Management Lessons
(Author’s View)
The Shop - A Chettiar money lending firm - a small
room
Simplicity
Agency system, Sub–Agency: Dispersed
themselves to all the distant places which were
feasible and reachable.
Penetrate to the interiors...Reach the unreached
Capital
1. Borrowed capital or deposits from the relatives
and kin
2. Chettiars were able to secure loans from the
European Banks for their working capital
3. Chettiar Women’s deposits (aachimar panam) -
interest would be duly credited
4. Loans from Parent – Bankers
5. Deposits set aside for charity- Practice of
“Magamai”- duly interest credited
Source diversification
Interest rates on Deposits and Loans
Chettiar money lending firms in one particular region
had a network and always followed a common rate
of interest for every month. This common interest
rate eliminated the competition among them.
Team
Business Family
Business Community

19. Dr VK PDPU 19
A Kittangi Organogram: https://shodhganga.inflibnet.ac.in/bitstream/10603/244923/1/01_title.pdf

20. Dr VK PDPU 20

21. Mudalaali (owner) in his late-
30s or early-40s.
Pangaali (partner) in his early-
30s
Kootali (agent) in his mid-20s
Aduthaal (clerk) in his early 20s
Podiyan (office boy/peon) at the
age of 13-17
This community, in the past, put its faith on on-the-job training rather than formal education.
21Dr VK PDPU

22. Other Business Ventures - India
Textile Industry
Other Industries: Sugar mill, Paper Mill, Cycle Factory, Insurance
Companies
Later : Consumer goods like stationeries, Medical shops or
departmental stores
But,
The transition of chettiar firms into modern industry took time;
22Dr VK PDPU

23. Another disaster…
Financial crisis during 1930s- farmers were not able to repay the debts - ignited
the resentment towards the chettiars. Japanese Invasion on Burma,
Nationalisation of Lands…The Chettiars became the victims of freedom
movements of the 1940s and 1950s in the Southeast Asian countries,
particularly in Burma, from they were forced to leave abandoning all their
wealth.
In Ceylon, money lending Ordinance, citizenship laws of Ceylon… Chettiars
lost all the motivation to stay back in Ceylon
The post-war decrease of the Chettiars' finance business is not only valid for
Burma, Ceylon and Malaya, as well as South India, but may be also observed
in other Southeast Asian and African countries
Fortunately, the governments of Malaya and Singapore recognised the Indians,
particularly Tamils and accepted them as rightful citizens with respect
Migration not geographical…call for reverse migration
In the year 2013 by the Nagarathar Association, Singapore, International
Business Conference of Nagarathars 2013 (IBCN - 2013) to
Rekindle Entrepreneurship, Revive Business networks, Reignite passion and
Regain the influence
23Dr VK PDPU

24. Sources
• Academic
NATTUKOTTAI CHETTIARS BUSINESS PRACTICES AND PERSPECTIVES, PhD Thesis submitted to the
Pondicherry University, 2016; https://shodhganga.inflibnet.ac.in/bitstream/10603/244923/1/01_title.pdf
BANKER'S TRUST AND THE CULTURE OF BANKING AMONG THE NATTUKOTTAI CHETTIARS OF COLONIAL
SOUTH INDIA – 1989; https://www.jstor.org/stable/312703?seq=1#metadata_info_tab_contents
IMMIGRANT ASIANS AND THE ECONOMIC IMPACT OF EUROPEAN IMPERIALISM: THE ROLE OF THE SOUTH
INDIAN CHETTIARS IN BRITISH BURMA – 1974;
https://www.jstor.org/stable/2052938?seq=1#metadata_info_tab_contents
THE DEVELOPMENT OF MODERN ENTREPRENEURSHIP IN THE CHETTIAR COMMUNITY OF TAMILNADU 1900-
1930, 1973; https://www.jstor.org/stable/44138703
Weerasooriya, W. (1973). The Nattukottai Chettiars Merchant Bankers in Ceylon. Dehiwala, Srilanka: Tisara
Prakasakayo.
• Traveler /Tourist
http://www.natgeotraveller.in/chettinad-guide-magnificent-mansions-peppery-cuisine-and-antique-markets/
https://frontline.thehindu.com/arts-and-culture/heritage/article25547717.ece/photo/2/
https://youtu.be/G5Hpf8V0De4
• Newspapers
https://www.business-standard.com/article/economy-policy/chettiars-struggle-to-bring-family-into-business-
113122601013_1.html
https://www.business-standard.com/article/economy-policy/chettiars-struggle-to-bring-family-into-business-
113122601013_1.html
https://www.livemint.com/Companies/XQVvI6OB5ZwY5XZ3JMzDwM/Murugappa-Group-From-Burma-to-Parrys-
Corner.html
https://www.deccanchronicle.com/nation/in-other-news/200816/in-search-chettiar-roots.html
https://www.thehindu.com/features/magazine/chettiar-connect/article6730599.ece
https://www.deccanherald.com/content/55347/they-had-won-confidence-britishers.html
https://www.thehindu.com/real-estate/the-glorious-mansions-of-the-chettiars/article19401972.ece
• Websites
http://www.encna.org/about.html
24Dr VK PDPU