CHAPTER:1 INDUSTRY PROFILE

The economic system could not function without financial institutions.

These institutionsincluding commercial banks, savings and loan associations, and credit
unionsare financial go-betweens.
They keep money flowing throughout the economy among consumers, businesses, and
government.
When people deposit money in a bank, that money does not sit in a vault.
The bank lends the money to other consumers and businesses.
The dollars may be loaned to consumers to help finance new cars, homes, college tuition, and
other needs.
Businesses may borrow the money for new equipment and expansion.
State and local governments may borrow to build new highways, schools, and hospitals.
The interaction that financial institutions create between consumers, businesses, and
governments keeps the economy alive.
Without financial institutions, consumers would probably keep their cash under a mattress or
locked in a safe. Money could not circulate easily, the nations money supply would shrink,
funds would not be available for consumer spending, demand for goods and services would
fall businesses could not get the money to modernize plants and develop new products, the
economy would slow down, jobs would become scarce. As we can see, the economy depends
on the flow of money and the services financial institutions provide.
This chapter looks at the many types of financial institutions and services and describes
different types of checking accounts and special checks.
Financial institutions keep money flowing through the economy among consumers,
businesses, and government.

 In the past, financial institutions were more specialized.

Each type of institution offered a distinct set of services to a specific set of customers.
Deregulation, computer technology, and recent economic conditions have made these
institutions more alike. Following are brief descriptions of financial institutions and their
services.

A commercial bank is owned by stockholders and operated for profit.

Its primary functions are to receive, transfer, and lend money to individuals, businesses, and
governments.
Commercial banks are often called full service banks. They offer a wide variety of services.
These banks may be chartered by the federal government or by a state government.
Federally chartered banks are called national banks and may use the word national in their
names.
These banks must comply with federal banking regulations. State chartered banks are
regulated by state banking commissions.
The Federal Deposit Insurance Corporation (FDIC) is a U.S. government agency that protects
bank customers by insuring their deposits. It also examines and supervises financial

institution policies and operations. Its goal is to help maintain consumer and business
confidence in the banking system.
To do this, the FDIC insures bank deposits. This guarantees that depositors are protected if
their bank fails or cannot repay deposits on demand. 8-2 Accounts in commercial banks are
insured by the FDIC.

Savings and loan associations (S&L) are financial institutions that previously only made
mortgage loans and paid dividends on depositors savings.
Today savings and loan associations offer most of the services commercial banks do. They
may be state or federally chartered.
There are two types of savings and loans.
(1) Mutual savings and loan associations are owned by and operated for the bene t of their
depositors. These depositors receive dividends on their savings.
(2) Stock savings and loan associations are owned by stockholders. Like commercial banks,
these companies operate for profit

A credit union is a non-profit financial cooperative owned by and operated for the benefit of
its members. Its services are offered only to members.

 Membership is available through affiliation with an employer, a union, religious

organization, community organization, or some other group. Since credit unions are not-forprofit organizations, they pay no federal income taxes.
Members often run them, and operating costs may be relatively low. For these reasons,
successful credit unions can lend funds to members at slightly lower rates than other financial
institutions.
They may also pay slightly higher interest rates on savings.
Credit unions may be either federally or state chartered. The National Credit Union
Administration (NCUA) grants federal charters and supervises credit unions across the
country.
NCUA also insures deposits in all federally chartered and many state chartered credit unions.

A mutual savings bank is owned by its depositors. After deducting operating costs and cash
for reserves, earnings are divided among depositors.
These earnings are dispersed in the form of dividends.

 Traditionally, mutual savings banks received and paid dividends on deposits and made home
mortgage and improvement loans.

When choosing a financial institution, consumers generally look for checking, savings,
investment, and credit services.
Before opening an account, it is wise to do some research. Web sites of banks and other
institutions have information about their services and fees.
Compare local banks, credit unions, savings and loan associations, and other providers of
financial services.
Find the place that best serves your current and ongoing financial needs.
Once you choose a financial institution, it pays to establish a good working relationship.
Make your financial needs known and learn how the institution can help you manage your
money.

 Before you open an account, find out if the banking institution is insured by the federal
government.
A sign stating Insured by FDIC or Insured by NCUA should appear by the front window
or near each teller station.
You can learn if an institution is FDIC-insured by checking the Federal Deposit Insurance
Corporations Web site at www.fdic.gov.
Access its Bank Find feature and provide the name and address of the banking institution you
want to check.
When customer deposits are federally insured, it means the bank, savings and loan, or credit
union is regularly checked.
The institution must pass ongoing examinations into its financial holdings, operations, and
management.

Services of Financial Institutions

 Today many of the services offered by financial institutions are provided through electronic
funds transfers.
An electronic funds transfer (EFT) refers to the movement of money electronically from one
financial institution to another.
These electronic transactions occur much faster than check and cash transactions. Some of
the following electronic services helpful in managing your money.

(1) Automated Teller Machines

An automated teller machine (ATM), also

called cash machine, is a computer terminal

used to transact business with a financial

institution.
An ATM card allows customers to
withdraw cash from and make deposits to
their accounts using an ATM. The card is
coded with account information and
protected by a personal identification
number or PIN.
Terminals are located at financial
institutions and other convenient locations.
They are usually available 24 hours a day.
ATM cards are discussed in more detail
later in the chapter.

(2) Direct Deposits or Withdrawals

Customers using this service can arrange to

have pay-checks, social security checks,
and other payments deposited directly into
their accounts.
They can also pay bills without writing and
mailing checks.
Recurring billscar payments, insurance
premiums, utility bills, and otherscan be
automatically paid.
Money can be transferred from a checking
to a saving account each month, creating
an automatic savings program.
All these transactions are recorded and
included in monthly bank statements.
Using EFT in these ways can make
managing money more convenient.

(3) Point-of-Sale Transfers

POS, or point of sale, is the place a

transaction was made.
A point-of-sale transfer occurs when you
move money from your account to pay for
a purchase. This requires the use of a debit
card. First, the merchant scans your card.
Then the amount of the purchase
immediately transfers from your bank
account to the merchants account.
This allows you to purchase merchandise
without checks, cash, or credit.

(4) Online Banking Services

Many consumers find online banking more
convenient than traditional banking.
They can conduct banking business from
home 24 hours a day.
The bank assigns user identification
numbers and security codes that allow
customers to gain access to their accounts
online.

(5) Stop Payment

Upon your request, a financial institution
will refuse to honor a check you wrote.
This service is useful if a check is lost or
stolen and you want to prevent others from
cashing it.
Stop payment is also useful when you have
a grievance concerning goods or services
paid for by check.
A charge generally applies for this service,
but it may be well worth the cost.

(6) Overdraft Protection

An overdraft is the act of writing a check
for an amount greater than the balance of
the account.
With overdraft protection service, a
financial institution will honor a check
written by you even if it exceeds your
account balance.
Banks normally charge a $25 or higher fee
for each overdraft.
Customers can avoid overdrafts by
managing their accounts well.
Although overdrafts are not encouraged,
some banks offer overdraft protection.
This involves automatically moving money
from the customers savings account to the
checking account to cover the amount of
the check.

(7) Drive-Up and Mail-In Services

Many financial institutions offer customers
the convenience of making deposits and
withdrawals by mail or at drive-up
windows.
Drive-up banking may even be available at
times when the lobby is closed.

(8) Safe-Deposit Boxes

Some financial institutions rent boxes in
their vaults for the storage of valuables.
Jewelry, birth records, insurance policies,
and other important items are often kept in
safe-deposit boxes.
This is an important feature if you need a
safe location for valuable or irreplaceable
items.

(7) Financial Counselling and Special

Programs
Specialized services may include a trust
department, tax reporting assistance, and
financial planning.

 Additional offerings may include money

market funds, and mortgage loans.
There may be associated fees.

 Managing the Cards Linked to Your Account

You may be offered credit, debit, and ATM cards when you open a checking account.
Inquire about the service fees associated with using your ATM and debit cards and any limits
applying to their use.
To avoid errors in your account balance, record all transactions and fees in your checkbook
register.
Keeping your receipts will also help.
If used wisely and responsibly, these cards can provide you with greater financial flexibility.

 The Muthoot Group is an 129-year-old business house based in India.

It has interests in Financial Services, Information Technology, Media, Healthcare, Education,

Power Generation, Infrastructure, Plantations, Precious metal, Tourism, and Hospitality.

The Muthoot Group operates in 25 states in India, and has presence in USA, UK and UAE.
It is owned and managed by the Muthoot Family.
The Group takes its name from the Muthoot Family based in Kerala.
The Company was set up by Muthoot Ninan Mathai in 1887 at Kozhencherry, a small town

in the erstwhile Kingdom of Travancore (Kerala).

It was then later taken over by his son M George Muthoot who incorporated the Finance
division of the group which was until then primarily involved in wholesale of grains and
timber.
The company is now managed by the third and fourth generation of its family members.
The group is headquartered in Kochi, Kerala. The Group manages assets of over USD4
Billion.

HEAD OFFICE:-

Let us not judge ourselves by the profit we make but by the trust and the confidence
that people have in us. Let us cherish and nurture that trust and ensure that every
person who deals with us deals with the confidence that he will not be misguided but his
interests will be carefully protected.

Mr. M.G. George Muthoot

Chairman

Mr. George Alexander Muthoot

Managing Director
( chartered accountant who qualified with a first rank in Kerala and
ranked 20th overall in India, in 1978)

Mr. George Jacob Muthoot

Joint Managing Director
(George Jacob Muthoot has a degree in civil engineering from Manipal
University and is a businessman by profession)

Mr. George Thomas Muthoot

Joint Managing Director
(George Thomas Muthoot is a businessman by profession)

Mr. Alexander George Muthoot

Whole time Director
Mr Alexander George Muthoot, is an MBA Graduate from Thunderbird
University (USA) and an advanced diploma holder in Business
Administration from Florida International University, Miami (USA).

Mr. John K. Paul

Independent Director
John K. Paul is a graduate in engineering from the Regional Engineering
College, Kozhikode and a businessman by profession.

Mr. K. John Mathew

Independent Director
K. John Mathew is a graduate in law from the Government Law College,
Ernakulam and is a retired judge of the High Court of Kerala

Mr. K George John

Independent Director
Mr. George is a post graduate in Mathematical Statistics.

Mr. George Joseph

Independent Director
George Joseph is a first rank holder commerce graduate from Kerala
University

Ms. Pamela Anna Mathew

Additional Director
She holds a Post graduate degree in Economics & Business
Administration from Kerala and Cochin University.

Mr. K. R. Bijimon
Chief General Manager
K. R. Bijimon, our Chief General Manager is a Fellow Member of the
Institute of Chartered Accountants of India, New Delhi

Mr. Oommen. K. Mammen

Chief Financial Officer
Oommen K. Mammen , our Chief Financial Officer is a Fellow member of
the Institute of Chartered Accountants of India, New Delhi.

Our

core

values

ETHICS

VALUES

Our main aim is to put the needs of the customer first before
anything else.
We strive to provide you with the best quality of service under
the Muthoot Brand Umbrella and we do the same with a smile.

Accountability for all our operations & services and towards the
society makes us a socially responsible and intelligent citizen.
Our empire has grown leaps and bounds on the basis of these
values. The times may change, but our values will remain
unchanged.

With an unblemished track record throughout the markets we

serve; and across national as well as global boundaries,
RELIABILITY Muthoot Finance values its commitment to customer-service.

We do not judge ourselves by the profit we make but by the

trust and confidence that people have shown in us for the past
129 years.
DEPENDABILITY Over 6 million people have turned to us for help in their hour
of need just because of this guiding principal of ours.

We pledge loyalty in our operations, fairness in our dealings

and openness in our practices.
TRUSTWORTHIN At Muthoot Finance Ltd., we embrace policies and practices
ESS
that fortify trust.

INTEGRITY

GOOD WILL

The value is innate to a corruption-free atmosphere and an

open work culture.
We at Muthoot Finance Ltd. therefore cultivate transparency as
a work ethic.

Muthoot Finance serves more than 6 million customers across

the country.
We add over 2,00,000 customers each day to our customer
base. With an unmatched goodwill, the company shoulders the
responsibility of creating a deserving brand image.

WHY US
We are the largest gold financing company in India in terms of loan portfolio,
according to the 2015 update to the IMaCS Research & Analytics Industry
Reports, Gold Loans Market in India, 2015 ("IMaCS Industry Report, (2015
Update)").
We provide personal and business loans secured by gold jewellery, or Gold
Loans, primarily to individuals who possess gold jewellery but could not access
formal credit within a reasonable time, or to whom credit may not be available at
all, to meet unanticipated or other short-term liquidity requirements. ...

25000
129 year
Employees

4200+

6 million

Branches spread
Existence

Customers in its portfolio

over 21 states &

4 Union Territories

131 Tonnes
450,000+

Gold Jewellery kept as

investor base across debenture
Security as on
subordinated debt portfolio
31st march, 2015

8,240 cr
market capitalization as on
31 st march, 2015

23,408cr
Retail loan assets under
management as on
31 st march, 2015

Retail
and

22,000+

Trained personnels ensure

operational Efficiency and business

80,000+

Customers are served every day;

their satisfaction confirms repeat

growth
through

business

64+

Learning centres, along with two

management academies help
strengthen our capabilities
continued training

We are back with a more customer-oriented

approach, reaching out to customers
aggressively.
We are back with new
products, novel to gold loan
industry.
We are back with new marketing and
sales strategies to expand and deepen our
presence and strengthen our brand.
and

We are back with a more skilled

promising team, who are welltrained to meet and exceed
customer expectations.

And amid all this, we continue to strengthen

our social engagements.
We are not just running a
business.

We are a vehicle for social empowerment to

help millions of people translate their latent
aspirations into visible achievements.

Let us not judge ourselves by the profit we make but by the trust and the confidence that

people have in us.

Let us cherish and nurture that trust and ensure that every person who deals with us deals
with the confidence that he will not be misguided but his interests will be carefully

protected. .
Even before the word ethos found a place in the corporate lexicon, Muthoot Finance Ltd.
imbibed a work culture based on conscience. Since its inception, the company has nurtured

trust as its most prominent value.

We are committed to keep this heritage alive throughout the generations to come.
At Muthoot Finance Ltd. we are committed to creating a balance. We believe in a simple yet

profound theory of from excess or scanty, to appropriateness.

A prominent example of this is our financial inclusion policy. The company provides gold

loan on extremely easy terms and conditions to people of each segment of the society.
Our gold loan range begins from Rs. 1500 and there is no maximum limit. Driven by the
invaluable trust and commitment that people have shown in us through centuries, we created
a reputable market image.

SERVICES:

SERVI

Gold
loan

Gold coin

Housing
finance

Money
transfer

Travel
jango

Foreign
exchange

Insuranc
e

GOLD LOANSCHEMES

Ideal for: Lower to Middle Income Group

Customers seeking modest loan amount at
best interest rate.

Limits: Avail Minimum Loan of Rs.1500 &

Maximum Loan up to Rs. 1 Lac.

MUTHOOTBEST
VALUE LOAN (MBL)

Scheme with Lowest Rate of Interest of 14%

p.a

Special scheme exclusive to Women

customers offered at our South India

branches only.
Limits: Avail Minimum Loan of Rs.1500 &

Maximum Loan up to Rs. 50,000.

Highly discounted rate of 12% p.a. to
encourage women customers

MUTHOOTMAHILA
LOAN

Ideal for: Customers who want maximum

loan value and wish to earn discounts by

timely payment of monthly interest.

Limits: Avail Minimum Loan of Rs.1500 &

Maximum Loan less than Rs. 3 Lacs.

Rate of interest is 23.5% p.a. with 2% rebate if
100% interest is paid monthly & 1% rebate if

MUTHOOTSUPER
LOAN

100% interest is paid quarterly

Ideal for: Customers who want maximum

loan value and wish to earn discounts by
timely payment of monthly interest.

Limits: Minimum Loan of Rs. 3 Lacs and no

maximum limit.

Rate of interest is 22.5% p.a. with 2% rebate if

100% interest is paid monthly & 1% rebate if

MUTHOOTPREMIER
LOAN

100% interest is paid quarterly

Ideal for: Customers from Business

community, traders, property dealers,

builders, shop owners etc. who wish to avail

loans for a longer period.

Limits: Minimum Loan of Rs. 3 Lacs and no

maximum limit.
One of our best selling product with
interest rate as low as 17% p.a. &

MUTHOOTHIGH
VALUE LOAN (MHL)

Maximum Loan Value offered

Avail up to 50% discount on Services charges
for Loan amount between Rs. 5-10 Lacs till
31st March 2016

Specially designed scheme for Businessmen,

traders, petrol pump owners, pharmacists,

shopkeepers etc.
Limits: Minimum Loan of Rs. 2 Lacs and

Maximum Loan of Rs. 50 Lacs.

Ideal as an ADDITIONAL BANK LIMIT to
attend immediate funding requirements

MUTHOOTOVER
DRAFT SCHEME
(MOS)

to grow your business.

Freedom to withdraw & repay money as and

when required with FREE locker facility.

Shortly coming: Facility to use limit

online on your sanctioned MOS scheme.

Up to 50% waiver on Processing
Charges irrespective of loan amount
reduced from Rs. 1500 to Rs. 750 till 31st Mar
2016.

MUTHOOTEMI SCHEME (MES)

Ideal for: Professionals & salaried class

customers who prefer paying easy
instalments (EMI payments) instead of lump
sum or bullet payments.
Limits: Minimum Loan of Rs. 20,000 & no
maximum limit.
Option to choose loan tenure from 6, 12, 18,
24, 30 and 36 months with no penalty on
premature closures.

Attractive 21% rate of interest (diminishing

balance) with Maximum Value Loan offered
3 days grace period for late payment of EMI &
freedom to pay one or more EMIs based on
your convenience.

999 PURE GOLD & SILVER COINS.

FINANCE SCHEMES WITH EASY MONTHLY INSTALLMENTS.

AVAILABLE IN VARIOUS DENOMINATIONS TO SUIT EVERY

POCKET.

FASTEST MONEY TRANSFER FACILITY IN THE COUNTRY.

OVER 12,00,000 TRANSFERS ANNUALLY.
RECEIVER DOES NOT HAVE TO PAY ANY SERVICE CHARGE,

COMPETITIVE FOR ALL CURRENCIES.

PROVIDE TRAVEL CURRENCY CARD WITHOUT ANY

CHARGES.

COMMISSION FREE ENCASHMENT OF TRAVELLERS

CHEQUES.

COMPETITIVE INTEREST RATE -9.90%P.A ONWARDS.

LOW PROCESSING FEES @ 0.50% WITH A MAXIMUM OF

RS.10,000.

LOAN SANCTION IN 48 HOURS (AFTER GETTING ALL THE

REQUIRED DOCUMENTS).

INTERNATIONAL DOMESTIC AIR TICKETING AND VISA SERVICES.

RAILWAY TICKETING.

TOUR PACKAGING (IRCTC APPROVED AND IATA CERTIFIED)

BEST RETURNS AND COMPLETE SECURITY COVER FOR A

LIFETIME.

TIE UPS WITH ICICI PRUDENTIAL , LIFE INSURANCE , SBI LIFE

INSURANCE , HDFC LIFE , KOTAK LIFE & AEGON RELIGARE.

WIDE PRODUCT RANGE TO SUIT DIFFERENT NEEDS.