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Muthoot Pappachan Chits, part of the diversified Muthoot Pappachan Group, is targetting ₹3,000-crore business by the end of next fiscal (2019-20), supported by its aggressive expansion plan across non-metros in the southern region.
At present, the company generates business worth ₹300 crore from the southern region.
Chits return
The chits business, which is now making a comeback, has been gaining momentum for the company, since it was re-started a few years ago after exiting the business in the 1980s due to lack of clarity in regulations and cost pressures.
“While regulations are clear now, adoption of technology comes in handy to reduce cost and be competitive,” Thomas John Muthoot, Chairman and Managing Director, Muthoot Pappachan Group, told BusinessLine .
“By next fiscal, we want to cover entire Tier 2 cities of south and target a total business of ₹3,000 crore with more than 15,000 subscribers,” said Roy John, Vice-President, Chits Business.
In Karnataka, it operates chits business in Bengaluru, and will soon expand to Davangere, Mysore and Hubballi. In Tamil Nadu, after Chennai, it will expand to Coimbatore, Tirupur, Tiruchi and Madurai. It will also cover other southern States in the next fiscal.
Many things are in favour of the chits business now. Apart from a clear policy framework, the strong branch network of its group, technology, and availability of credit bureau scores, among others, help reduce the risk levels in assessing the creditworthiness of a customer.
“Our onboarding of customers is digital-enabled. We have automated everything, and can provide the printed agreement in dual languages quickly. There is no need for manual filling of applications or forms,” said John.
Branch network
Also, Muthoot Fincorp’s network of 3,600 branches, spread across the country, which offers different products such as affordable housing loans, two-wheeler loans, and a few other products, is a big plus. More than 65 per cent of the branches are in small towns and rural areas.
“In a month, we are handling 25 lakh customers, of which, 1.5-2 lakh would be new customers. Every branch interacts with 4,500 new customers on an average everyday. This is a strong captive base to target for the chit business,” said Muthoot.
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