ICFAI Business School

IFHE, Hyderabad

A Project Report of
Indian Financial System
(2023)

“Muthoot Finance”
Submitted By:
Submitted To:
Dr. Abdul Rishad Group members:

010869 – T. Hridya

010493 – Majeti Harika

010112 – Rahul goud

Introduction:

Muthoot Finance Ltd is an Indian financial corporation and the largest gold loan
NBFC in the country. In addition to financing gold loans, the company offers
other forms of loans, insurance and money transfer services, and sells gold
coins. The company is headquartered in Kochi, Kerala and operates over 4,400
branches throughout the country. Outside India, Muthoot Finance is established
in the UK, the US, and the United Arab Emirates.

The company falls under the brand umbrella of the Muthoot Group. Its stocks
are listed on the BSE and NSE since its initial public offering in 2011. The
target market of Muthoot Finance includes small businesses, vendors, farmers,
traders, SME business owners, and salaried individuals.

The company was incorporated as a private limited company on 14 March 1997

with the name "The Muthoot Finance Private Limited" under the Companies
Act.

On 18 November 2008, the company was converted into a public limited

company with the name "Muthoot Finance Limited". During the year 2009–10,
the company added 620 new branches.

In 2014, Muthoot Finance acquired a majority stake in Asia Asset Finance plc, a
Sri Lankan publicly-listed financial services company.

In July 2016, Muthoot Finance acquired 46.83% of the capital of Belstar

Investment and Finance Private Limited (BIFPL).

In May 2018, Muthoot Finance acquired Muthoot Money, a Non Deposit taking
Non-Banking Financial Company.

Mission
To build leading customer-centric businesses enabled by technology,
maintaining the highest standards of corporate governance and uncompromising
values.

Vision
Be the most trusted, globally diversified institution enriching lives of the masses
while contributing back to the society.
Services Provided by Muthoot Finance:

1. GOLD LOAN.
2. GOLD LOAN@HOME.
3. HOUSING FINANCE.
4. PERSONAL LOAN.
5. INSURANCE.
6. GOLD COIN.
7. MONEY TRANSFER.
8. NCD.

Genesis and Evolution:

 2001 – RBI license obtained to function as an NBFC

 2004 – Obtained highest rating of F1 from Fitch Ratings for short term
debt of Rs 20 crore

 2005 – Retail loan and debenture portfolio of the company exceeds Rs 50

crore
 2005 – Merger of Muthoot Enterprises Private Limited with the company

 2006 – F1 rating obtained from Fitch Ratings affirmed with an enhanced

short term debt of Rs 40 crore

 2007 – Retail loan portfolio of the company crosses Rs 1000 crore

 2007 – RBI accords status of Systemically Important ND–NBFC
 2007 – Branch network of the company crosses 500 branches
 2007 – Net owned funds of the company crossed Rs 100 crore

 2008 – Retail loan and debenture portfolio crossed Rs 2000 crore and Rs
1000 crore respectively
 2008 – Net owned funds of the company crossed Rs 200 crore
 2008 – F1 rating obtained from Fitch Ratings affirmed with an enhanced
short term debt of Rs 80 crore
 2008 – Overall credit limits from lending banks crosses Rs 500 crore
 2008 – Conversion of the company into a public limited company
 2008 – Fresh RBI license obtained to function as an NBFC without
accepting public deposits, consequent to change in name
 2009 – Retail loan and debenture portfolio crossed Rs 3000 crore and Rs
1500 crore respectively
 2009 – Net owned funds of the company crossed Rs 300 crore
 2009 – Gross annual income crosses Rs 500 crore
 2009 – Overall credit limits from lending banks crossed Rs 1000 crore

 2010 – Retail loan and debenture portfolio crossed Rs 5000 crore and Rs
2000 crore respectively
 2010 – Net owned funds of the company crossed Rs 400 crore
 2010 – Overall credit limits from lending banks crosses Rs 2000 crore
 2010 – ICRA assigns ‘A1+’ rating for short term debt of Rs 200 crore
 2010 – CRISIL assigns ‘P1+’ rating for short term debt of Rs 400 crore
 2010 – Branch network of the Company crosses 1,000 branches
 2010 – Demerger of the FM radio business into Muthoot Broadcasting
Private Limited
 2010 – Private equity investment of an aggregate of Rs 157.55 crore from
Matrix Partners India Investments, LLC and Baring India Private Equity
Fund III Limited
 2010 – Private equity investment of an aggregate of Rs 42.58 crore from
Kotak India Private Equity Fund and Kotak Investment Advisors Limited

 2013 – Obtains RBI License to start operating 9,000 White Label ATMs

 2014 - The Muthoot Group was presented with Emerging Business

Leader of the Year title by Hon'ble Union Minister of Home Affairs, Shri
Rajnath Singh at the fifth edition of AIMA Managing India Awards 2014.
Muthoot Finance has announced that it has acquired 30 per cent stake in
Asia Asset Finance in Sri Lanka. Muthoot Finance Ltd successfully
completes its Institutional Placement Program. Muthoot Finance launches
scheme for Kerala customers for Onam.

 2015 - Muthoot Finance Ltd joins hands with Yes Bank Muthoot Finance
launches the website for Muthoot ATMs. Muthoot Finance Launches
Missed Call Service to know the Gold Loan Status

 2016 - Muthoot Finance Completes Acquisition of Muthoot Insurance

Brokers Pvt Limited

 2017 - Muthoot Finance launched a new loan scheme targeted at Small

and Medium Enterprises (SME) for their working capital requirements.
  2018 - Muthoot Finance Limited has completed the acquisition of M/s.
Muthoot Money Private Limited.

 2019 - Muthoot Finance proposed Acquisition of IDBI Asset

Management Limited and IDBI MF Trustee Company Limited.

 2020 - Muthoot Finance was honoured with twin Corporate Social

Responsibility Awards (CSR) - Return to Consumer and Community
Development at a glittering ceremony held at Taj Deccan in Hyderabad.
Muthoot Finance, India’s largest gold loan NBFC has won the title of
Most Trusted Financial Services brand for the fifth year in a row
according to TRA's Brand Trust Report 2020 rankings.

 2021-Muthoot Finance has been profiled in India’s Leading BFSI and

FinTech Companies 2021 by Dun & Bradstreet. The Muthoot Group wins
CII DX Award for Best Practice in Digital Transformation 2021.

 2022 - Muthoot Finance bagged the Best CSR Organisation - Based on

Impact award at the inaugural edition of Made in Kerala Awards 2022.
Muthoot Finance, the flagship company of the Muthoot Group, wins the
coveted Skoch Financial Inclusion Award.

Role of Technology:

Various technological advancements and services in Muthoot Finance:

Loan Disbursement Options

 Instant Cash: Visit the branch and get instant cash from your loan amount.
 Pre-Paid Visa Card: Get a card & PIN instantly to immediately use your loan
amount credited onto the card. No need for a bank account or waiting for a card.
Do online transactions and lots more.
 Online Payment: Disbursement of loan through direct bank credits (RTGS /
NEFT / IMPS / Net Banking).

Digital Customer Services

 Aadhar Card-Enabled E-KYC: Customer onboarding through E-KYC \ bio-
metric fingerprint scanning.
 iMuthoot App: View your account statement and balance, locate nearest
branches and avail the QuickPay facility.
 Web pay Facility: Avail online Gold Loan, pay principal & interest online,
along with part payment, free top-up and multiple withdrawal facilities.

Emsyne:

Muthoot Systems and Technologies Pvt. Ltd. (Emsyne) is the Information

Technology Division of The Muthoot Group. Established in 2006 and
headquartered in Infopark, Kochi, Emsyne caters to the software development
and maintenance needs of The Muthoot Group apart from being a total software
solutions provider to select global clients. Emsyne has specialized in financial
software solutions and has developed a powerful and user-friendly Core
Banking Solution (CBS) which has been running smoothly in over 5000+
Branches of the Group accessed by 15,000+ concurrent users.

Emsyne, with its focus on quality and in-depth knowledge in financial domains,
has been successful in meeting the unique requirements of BFSI clients. It has a
suite of ready-to-deploy software packages, ranging from highly scalable core
banking solutions to foreign currency management systems. The software and
mobile solutions developed by Emsyne have been recognized for providing a
high level of performance, scalability, reliability, and user comfort. The
company’s approach focuses on enabling businesses by combining innovations
and process improvements through the latest technologies.

THE MUTHOOT GROUP BECOMES ONE OF THE FIRST IN THE

NBFC SECTOR TO LAUNCH AN AI-BASED CHATBOT - “MATTU &
MITTU”

The Muthoot Group, one of India’s leading business conglomerates today

announced the launch of its Chatbot ‘MATTU & MITTU’ [Muthoot Advanced
Technology Transformation Unit (MATTU), Muthoot Intelligent Technology
Transformation Utility (MITTU)]. MATTU & MITTU will be represented by
two elephant mascots that come together to denote the Group’s famous logo.
The company is first in the Indian Gold Loan industry to use a bot on its official
website – www.muthootfinance.com ‘MATTU & MITTU’ is an Artificial
Intelligence powered Virtual Assistant that will offer 24/7 customer assistance
and instantly respond to customer queries across The Muthoot Group’s diverse
products and services; ranging from Gold Loan, Insurance, Money Transfer,
Forex, Mutual Funds, Home loan etc. The AI-Bot is also said to act as a
financial advisor, helping break myths around Muthoot’s flagship product –
Gold Loans, and enabling customers to make informed decisions. It will help
the customer to register, get details about Gold Loan/other financial products,
 apply for a Gold Loan scheme, locate the nearest Muthoot Finance branch etc.
Among many other attractive features of the Bot, MATTU and MITTU will
also provide –

AI assisted live chat Predictive text Rating and instant feedback facility Natural
language processing Suggestive/informative conversations Specialised advice
based on customer inclinations Personalised advice through recognition of past
behaviour patterns Onsite support at a branch, without involvement of staff
Speaking about this development, Mr. Alexander George Muthoot, Deputy
Managing Director, The Muthoot Group said, “We, at The Muthoot Group,
have always been at the forefront of adopting technology and transforming
customer experience by providing them instant solutions to their financial
needs. ‘MATTU & MITTU’ is our latest addition to some of our already
existing technologically advanced systems like Core Banking Solution (CBS),
Customer Relationship Management (CRM), iMuthoot Mobile App etc. We
serve more than 2 lakh customers every day, and through our newly launched
Chatbot, we aim to redefine seamless customer experience by being present
where they are – Online. The bot is designed to increase the quality of the
relationship we have with our customers by enhancing and personalising their
financial journey with us.”

Challenges and Risks:

 Its weaknesses include its large dependency on gold loans. Since the company
is largely dependent on the gold business, a fall in gold prices will directly
impact the company.
 The company’s shareholding decreased last quarter due to MFs
 The company has a weak financial position i.e. it has a low Piotroski score.
 Increasing competition from the banks and non-banking financial institutions.
 While the company’s gold business is expected to do well, its subsidiary
businesses don’t seem to do well.
 The company’s housing finance segment saw disbursements decline by 40% in
the first quarter of this year. Post pandemic effects on housing finance don’t
give great signs of near growth.
 It has a high market cap, with low public shareholdings.

Future Trends and Suggestions:

Opportunities are targets to hit for something good to happen. These shouldn’t
have to be game-changers: even minute advantages can help a company
compete effectively. Changes in government regulations affecting their sector,
as well as changes in social patterns, demographic profiles, and lifestyles, can
all present fascinating opportunities.

Future Trends and suggestions for Muthoot Finance:

 Demand for gold will likely rise due to the lockdown implications.
 It is showing a good rise in net profit and has an increase of 10% in the
share market in the last three months.
 In recent times, it shows a decrease in Provision.
 The company can venture into new markets since it already has a good
image in the market.

Conclusion:
The organisation has a broad scale for business due to its diversified
geographical reach. However, one of its flaws is heavy reliance on gold. Today,
we are witnessing a plunge in gold prices, which adversely impacts their
business. As a result, the firm may leverage its leading reputation to expand into
new markets and services.
Muthoot Finance Ltd. is a market leader in gold loans, with consistent growth
over time.
Due to its consistent returns, the company’s reputation has grown over the
years. Despite the pandemic and a slew of challenges, the firm has managed to
maintain its position as the industry leader.
Thank you!