Money & Banking

Muthoot Pappachan Chits keen to expand across southern markets

Vinson Kurian THIRUVANANTHAPURAM | Updated on January 02, 2019

Muthoot Pappachan Chits, part of the Muthoot Pappachan conglomerate, has streamlined its systems and processes and is ready to scale up beyond Kerala and Karnataka.

“Digitisation of both the front- and back-ends are complete and we’re raring to break out of the traditional subscriber age group of 40- to 50 years,” according to a top company official.


Chits are a popular form of saving and borrowing in South India and a strong source of financial management, especially for large retail groups.

A mindshare product, it has a lot of proven potential, Roy John, Vice-President, Muthoot Pappachan Chits, told BusinessLine. It is the best saving-cum-borrowing instrument conceivable.

The government should promote it, given the potential benefits accruing to any class of customers. And that is the unique feature that enables chits to drive financial inclusion.

For instance, take the case of an IT professional. He may be earning Rs 50,000-Rs 60,000 per month. For him, currently, there are limited options to save from these earnings.

“We want to present to young and aspirational customers the speed and clarity of business facilitated by digital technology, even as we continue to serve the legacy customer base,” Roy said.

As of now, no chit player has reached out to tech-savvy young professionals, including the IT workforce. The digital channel is open to them to do business from their offices/ workplaces.


There is a good return since this is a unique saving product. The product is free from market fluctuations and the return depends on the saver-borrower dynamism of the group.

The difference will become apparent if one were to compare a chit fund product with a recurring account of say Rs 10,000 every month.

“Imagine, if this young professional confronts a medical emergency after five months of payment. How much can he possibly withdraw? Maximum of Rs 40,000 or 80 per cent of whatever he has paid up?

“But if he has subscribed to a chit with prize money of Rs 5 lakh and paid up only Rs 50,000, he has the option of bidding for the entire Rs 5 lakh.”

So this is an excellent product that takes care of both planned and emergency expenditures. The company wants to capture this segment of the market through the online/digital window.

Businessmen and traders, too, may find chits a cheap and easy way of securing funds to meet their regular and seasonal financial needs.


Normally, the chit business is based on an agreement between the subscriber and the foreman. It means six to eight pages of documentation, and there is a lengthy process involved.

But at Muthoot Pappachan Chits, after collecting the KYC details in a single page, the system will generate an automated agreement capturing the entire data of the subscriber.

The latter just needs to read and sign. There is no need to fill up anything; it is entirely automated and auto-populated, as Roy describes it.

The company stands out from other players since, according to him, it offers the maximum number of security options, including gold and a personal guarantee.

“We’ve been fine-tuning the processes, procedures and standards over the last eight months; and setting up the online payment mechanism and digital front-end,” Roy said.

The company has streamlined the entire operation and now wants to scale up beyond the home state of Kerala and neighbouring Karnataka, where it debuted last year.


“We opened our first branch outside Kerala in Bengaluru in April and touched a customer base of 1,000 in just 90 days; 1,800 customers in eight months with a business of Rs 80 crore,” Roy said.

This compares with the normal growth achieved by a chit business over a period of four or five years. The company wants to venture into Tamil Nadu next, with a branch in Chennai soon.

Andhra Pradesh and Telangana will be the subsequent pit-stops, before it heads further north. The company has 70 employees and is hiring from banks, NBFCs and chit funds.

The fast-paced growth is attributed to optimisation of multiple sourcing channels and effectiveness of the synergy between Muthoot Fincorp, an NBFC, and Muthoot Pappachan Chits.

“We have a lakh of customers walking into our 3,600 branches every day. We own an active four million-strong database across the group, which helps us understand our customers,” said Sanjeev Shukla, Chief Marketing Officer, Muthoot Pappachan Group.

Published on January 02, 2019

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor