Muthoot's quest for life beyond gold
leadership team of Muthoot Finance Ltd was asked to convene for an urgent meeting in Kochi, Kerala. M.G. George Muthoot, the company’s chairman back then, had a new plan to share—a few advertisements that could be key to an ambitious expansion he wanted to press ahead with.
In one of those television ads, crafted by creative agency Mudra Communications, a Hindi-speaking man was seen wanting to open a shop. He needed financing. His wife promptly suggested unlocking the potential hidden in their gold ornaments.
The man reluctantly pledged the gold to Muthoot, eventually embarking on a successful entrepreneurial journey. 20 years ago, it was difficult for most Indians, particularly those working in the informal sector, to get a business loan from banks. They didn’t have the documentation of income that banks wanted.
Gold loans were an option—like the ad conveyed, these are loans given against gold ornaments. While Indians love and hoard a lot of gold jewellery, such loans were not really in vogue in many parts of the country. Muthoot Finance, a non-banking financial company (NBFC), wanted to change the paradigm.
While the company was a familiar name in the south, people in the north struggled to pronounce the name, often calling it ‘Mud-koot’. The idea behind the ads, therefore, was to nudge people beyond south India to take gold loans. The bet paid off.
The advertising blitz popularized gold loans in every part of India, helping Muthoot Finance grow at a lively pace. The company now has 4,742 branches across the country, 41% of them in the north, the west and eastern India. As a percentage of its gold loan portfolio, these regions accounted for 35% of the company’s geographical spread a decade back.
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