TABLE OF CONTENTS

CHAPTER NO. PARTICULARS PAGE NO.

Title 1
Certificate 2
Declaration 3
Ackowledgement 4
Table of contents 5
List of tables 6
Abstract 7

Introdution 8-9
1

Literature 9-11
2

3 Research Design 11-16

Chapter-4 17-38

Chapter-5 39-42

6 Chapter-6 43

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 CHAPTER -1

INTRODUCTION
Muthoot Finance Limited (MFL) is a “systematically important non-deposit taking NBFC” that
is involved in the business of providing loans against gold and is today, considered to be the
largest company in India (in terms of loan portfolio, with a gold loan portfolio of Rs.22694
crores provided to over 5.5 million accounts) to be offering this service. It is the flagship
company of the Kerala based “Muthoot Group”. MFL has an operating history of over seven
decades having first started the gold loan business in 1939. Muthoot Finance Ltd. was
incorporated as a private limited Company on 14th March, 1997 and was converted into a public
limited Company on 18th November, 2008. The Company is promoted by Mr. M. G. George
Muthoot, Mr. George Thomas Muthoot, Mr. George Jacob Muthoot and Mr. George Alexander
Muthoot collectively operating under the brand name of „The Muthoot Group‟, which has
diversified interests in the fields of Financial Services, Healthcare, Education, Plantations, Real
Estate, Foreign Exchange, Information Technology, Insurance Distribution, Hospitality etc. The
Company obtained permission from the Reserve Bank of India for carrying on the business of
Non- Banking Financial Institutions on 13.11.2001 vide Regn No. N 16.00167. The Company is
presently classified as Systemically Important Non- Deposit Taking NBFC (NBFC-ND-SI).

The Company made an Initial Public Offer of 51,500,000 Equity Shares of the face value ` 10/- each
at aprice of ` 175/- raising ` 9,012,500,000.00 during the month of April 2011. The equity shares
of the Company are listed on National Stock Exchange of India Limited and BSE Limited from 6th
May, 2011. However it was only in 2001 that the company secured an NBFC license from the RBI.
In addition to the gold loan business, MFL also provides money transfer services through their
various branches by acting as sub-agents of various registered money transfer agencies. Recently
MFL has also got into the collection agency services. In addition to all of that the company also
operates three windmills in the state of Tamil Nadu. During the quarter ended December 31, 2013
MFL reported a PAT of Rs. 194 crore against a PAT of Rs. 270 crore in the corresponding period in
the previous financial year. The reduction in profits during the quarter were primarily on account of
the reduction in portfolio during the period (of 14%) and also owing under recoveries of interest
from auctioning of delinquent contracts. As on December 31, 2013 the company had a net worth of
Rs. 4121 crore and had a gross NPA% of 1.99%. Muthoot Finance Ltd (MFL) is the flagship
company of the Kerala based business house „The Muthoot Group‟, which has diversified operations
in financial services, healthcare, real estate, education, hospitality, power generation and

8
entertainment. MFL has a long and established track record of operating in the gold loan business and
is India‟s largest gold loan focused NBFC with a managed advance base of Rs. 21,618 crore
(provisional) as on March 31, 2014. The company operates through an extensive pan India branch
network of 4270 as on March 2014. The company derives a significant proportion of its business
from South India where gold loans have traditionally been accepted as means of availing short term
credit, although over the past few years the company has increased its presence beyond South India.

CHAPTER-2

LITERATURE:

 Sarika Malhotra says that not so long ago, NBFCs were a hot favourite of private equity investors
in India (Malhotra, 2013). With the Indian economy on a roll, most PE funds wanted to put their
money in non-banking finance companies (NBFCs) specialising in gold loans. But, today, gold
loan companies have lost their lustre because of a stricter regulatory environment and a volatile
gold market, pushing funds to vehicle finance companies instead. And with the economy in a
slowdown, exits from gold loan lenders have also become much harder. For example, the vehicle
financing company, Au Financiers, has been a virtual PE magnet the past few years. It first hit the
jackpot in 2008 when Motilal Oswal Private Equity invested INR 20 crore. Funds have been
pouring in since. Oswal invested another INR 20 crore in the company in 2010 and International
Finance Corporation (IFC) INR 35 Crore, followed by INR 150 crore by Warburg Pincus and
INR 33 crore by IFC last year. Chrys Capital also invested INR 120 crore in 2013. At the same
time, the lender has also grown from strength to strength: Au's net worth has leapt to INR 500
crore from just INR 15 crore in 2008 while its valuation has galloped to INR 1,200 crore from
INR 30 crore in the same period. For Motilal Oswal too, the investment was worth its weight in
gold. A partial exit in 2012 is reported to have translated into a five-fold return on investment,
while a further stake sale took its returns up 10 times. Vehicle finance companies in particular
have been attracting more funding. Quoting experts, the researcher says they offer more stability
than gold loan firms which are subject to business risks such as price fluctuations and quality of
collateral. Gold players have been hit by uniform valuation methodology for jewellery and
operating model changes suggested by the RBI which requires them to seek permission to open
new branches and disburse higher value loans through cheques. Also, PE funds believe in the
business model of lending against income-generating assets such as commercial vehicle finance,
as compared to businesses operating in consumption-based lending. Vehicle loan companies get
most of their business from semi-urban and rural areas. Most people in urban areas, looking to
buy cars, go to banks for loans, but those seeking trucks, especially from smaller towns, prefer

9
 vehicle finance NBFCs.

 The Reserve Bank of India‟s (RBI‟s) new guidelines on lending against gold will weaken the
competitive positions, growth prospects, profitability, and asset quality of gold loan non-banking
financial companies (Moneycontrol.com, 2013) (NBFCs). CRISIL expects the profitability of
these NBFCs to decline by nearly 75 basis points (bps), and their loan books to decline in the near
term. However, the new guidelines, issued on September 16, 2013, will promote orderly,
sustainable growth in the sector over the long term. Implementation of the RBI guidelines will
weaken the competitive positions of gold loan NBFCs vis-à-vis those of banks and the
unorganised sector. The introduction of uniform valuation methodology for jewellery will limit
the flexibility to offer loans at higher effective loan-to-value (LTV) ratios, and prompt customers
to move to other lenders. According to CRISIL Ratings, borrowers with limited stocks of
jewellery will move to the unorganised sector that will continue to offer loans at higher LTV
ratios. Interest-sensitive borrowers will shift to banks that offer loans at much lower costs for
similar or higher LTV ratios. The growth of the gold loan NBFC sector will also be constrained by
two stipulations in the new guidelines: that NBFCs take the regulator‟s approval before opening
new branches, and disburse higher-value (above INR 1 lakh) loans through cheques. Moreover,
intensifying competition will lead to reduced yield for gold loan companies. The detailed norms
on auctioning will also increase the operational costs and challenges in auctioning gold. The
desire to limit delinquencies to avoid auctioning will lead to higher investments in collection
systems. As a combined impact of these developments, the gold loan NBFCs‟ return on assets
(RoA) is expected to decline by nearly 75 bps.

 Compared with the rest of the world, in India, the gold loan market is big business Ashish and
Mehta. Until a decade back, most of the lending was in the unorganized sector through pawn brokers
and money lenders. However, this scenario changed with the entrance of organized sector players
such as banks and non-banking finance companies (NBFCs) which now command more than 25
percent of the market. NBFCs have been a major driving force behind this growth given their
extensive network, faster turnaround time, higher loan-to-value ratios and the ability to serve non-
bankable customers. Gold loans are among the newest sector status of gold loans by RBI, the pace of
securitization of these loans is slowing down as most of these securitizations focused on benefits
accrued through the use of agricultural sector status. Also, RBI‟s draft securitization guidelines
(Sept. 2011) had proposed minimum holding period (MHP) of 12 months for allowing securitization
transactions. Given the short tenure of gold loans (a year and lesser), securitization of the same will
not be possible. The government views gold loans as an effective means of meeting the demand for
micro-finance in India. This would encourage framing of policies favorable to the growth of the gold

10
 loan market. Since more than 75 percent of the gold loan market is still with the unorganized
segment as of 2010, the organized segment has a huge potential for growth through cannibalization
of the unorganizedsegment.

CHAPTER-3
RESEARCH DESIGN

3.1. OBJECTIVE OF THE STUDY

 To make a analytical study of various financial products

 To know the effective utilization of various financial products by

Muthootfinance corporation ltd.
 To study the problems connected with granting Muthootfinance to customer
 To know opinion of customer regarding CTF provided byMuthoot finance
forthe CTF.

3.1. SCOPE OF THE STUDY

The scope of the study is to identify and analyze thefactors which
make the gold loan provided by Muthoot Finance Limited the best and most
sought after. The reason behind the huge success of this facility is unlimited.
This study intendsto:
 To know the present market share of Muthoot FinanceLimited.
 Identify the factors responsible for the high customersatisfaction.

 To evaluate the social security and empowerment process of the company.

 To evaluate the suggestions of the customers which isnecessary for
thefurther development of the organization.

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 3.2. LIMITATIONS

 Time allowed for the study was not sufficient.

 A sample survey was selected.

 The data provided by the respondent may not be correct or accurate.

 Some of the samples selected for the study did not respond properly to the
questionnaire. However proper care had taken to make the analysis and
interpretations more meaningful.
 Questionnaires are impersonal, this means that it may be difficult to
understand answers and thus to act on them. Also, there is a chance that the
question may be misinterpreted, rendering the answer useless.

3.3. RESEARCH PLAN

In this chapter, explains the structural frame work. The research methodology
considered as a blue print of the study. It determines the strengths,
reliability and accuracy of the project. Methodology can be said as the methods
used by researchers in selecting samples, sample size, data collection and
various tools in data collection

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 3.4. PRELIMINARY INVESTIGATION

Preliminary investigation involves the following:

 Direct visit to the company.

 Discussions with the branch manager.
 Analyzed about the scope and viability of the existing
facilities.
 Secondary data were used to get an overview about the two companies.

3.6 EXPLORATORY STUDY

 Personal interviews with branch manager, staff and the customers.
Questionnaires were used to understand various factors affecting the
gold loan financing decision.

 To analyze and interpret the data collected using figures and tables.
 The last phase of this project is to give suggestions to Muthoot Finance.

3.7 RESEARCH DESIGN

“A research design is the plan, structure and strategy of investigation conceived so

as to obtain answers to researchquestions and to control variance” by
F.N. Kerlinger (1959)

13
 3.8 Sample design
Sample design deals with the method of selecting items tobe observed for
the given study.

3.9 Observational design

Observational design relates to the conditions under whichthe observations
are to be made while conducting researchstudies.

3.10 Statistical design

These design concern with the quantitative and statistical aspects of the design
such as technique of study, the methods of model building etc.

3.11 COLLECTION OF DATA

The successes of the study are based upon the proper collection of data.
Normally data collected comes under two categories; Primary and Secondary.

3.12 PRIMARY DATA

The data collected directly by the investigator are called primary data. They are
original and give firsthand information. It can be collected by different methods
viz. direct personal investigation, indirect oral investigation etc. Primary data were
collected through
- Questionnaire
- Personal interview
14
- Survey method

- Observation

- Expert opinion

3.12 Questionnaire
The primary data was collected mainly by using a questionnaire. In study,
structured questionnaire consisting of a list of questions pertaining to the
dichotomous questions, multiple choice questions and questions for
recommendationsand suggestions. This facilitates the respondents to fill up the
questionnaire is an easy and fast manner.
The questions are divided in two following sections: -

✓ Personal details
✓ Inquiry details

3.13 Personal Interview

The personal interview was taken from half of the respondents. This was mainly
to elicit information that was left out in the questionnaire opinions and
suggestions were askedfor the betterment of the project.

3.14 Survey method

Survey is the most commonly used method of primarydata collection in marketing
research. This is widely used because it’s extreme flexibility. Survey research is a
systematic gathering of data from respondents through questionnaire. Survey
technique used in the study is personal interview. The advantages of this method

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  It requires relatively shorter period of time to complete

 Researcher can procure many different

types ofinformation
 The amount of information produced on each aspect islarger.
 There is a possibility of more accurate reply

3.15 SECONDARY DATA

The collected by the investigator from the data already collected by others for some
other purposes are calledsecondary data. Thus, secondary data are refined data
fromprimary data. It is also called second hand data because data is collected from
previous reports about the organization from theinternal books, magazines and
World Wide Web. Secondary data are collected through
- Annual reports

- Websites
- Journals and magazines

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 ANALYSIS & INTERPRETATION OF DATA

TABLE 4.1 SHOWING THE CLASSIFICATION OF

RESPONDENTS ON THE BASIS OF THEIR INCOME GROUP

INCOME (RS.) NO. OF RESPONDENTS PERCENTAGE

Below 2000 15 30

2000-4500 13 26

4500-6000 12 24
6000 and above 10 20

TOTAL 50 100

Analysis

The above table shows the classification of respondents on the basis of their income group.
Out of 50 respondents (15N,30%) earns income below 20000, (13N,26%) earns income between

20000to 45000, (12N,24%) earns income between 45000 to 60000, (10N,20%) earns income

between 60000and above.

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 Interpretation

Chart showing classification of respondents on their monthly income. out of 50

respondents among the 15respondents were having a monthly income of less
than 2000 while 13 of them earned between 2000-4500, and 12 ofrespondents
have a monthly income between 4500-6000 and 12 of them earned above 6000.

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 TABLE 4.2 SHOWS THE RESPONDENTS ON THE BASIS
OF AGE GROUP

AGE GROUP (IN NO. OF PERCENTAG

YEARS) RESPONDENTS E
30-35 23 46

35-40 18 36
40-45 5 10
45-50 4 08

TOTAL 50 100

ANALYSIS

The above table shows the classification of respondents on the basis of age group. Out of 50

Respondents (23N,46%) earns income between 30-35 age group, (18N,36%) earns income

between 35-40 age group, (5N,10%) earns income between 40-45 age group, (4N,08%)

earns income between 45-50 age group.

20
 Interpretation:
Chart showing the classification of respondents according to their age group 23 of
the respondents among the 50 respondents have age group of less than 30-35, while
18 of then age group of between 35-40, 05 of the respondents have the age group
between 40-45, 4 of the respondents are in the age group of 45-50.

TABLE 4.3 SHOWS THE CLASSIFICATION OF

RESPONDENTS ON THE BASIS OF THEIR OCCUPATION

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 OCCUPATION NO. OF percentage

RESPONDENTS
Govt. employee 10 20

Businessmen 20 40

Agriculturist 7 14

Professional 13 26

TOTAL 50 100

Analysis

The above table shows that the classification of respondents on the basis of occupation. Out of 50
respondents (10N,25%) are government employee, (20N,14%) are businessmen, (7N,14%) are
agriculturist, (13N,26%) are professional.

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 Interpretation

Chart showing the classification according to their occupation out of 50

respondents, 10 of respondents are Govt. employee, 20 of respondents are
businessmen, 07 of respondents are agriculturist, and 13 of respondents are
professionals.

TABLE4.4 SHOWING THE HOW OFTEN DO

YOU TAKE AGOLD LOAN IN A YEAR

Opinion No Of Percentage

Respondent
Once 28 56
2-5 times 22 44
6-10 times 0 0
More than 10 0 0

Times

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 Analysis
The above table shows how often you take a gold loan in a year. Out of 50 respondents
(28N,56%) takes gold loan once in a year, (22N,44%) takes gold loan 2-5 times in a year

Interpretation

The above chart shows that the out of 50, the opinion ofthe 28 respondents
suggest that 56% of Muthoot’s customers applies for a gold loan just once,
while the rest of the 44% applies for a gold loan 2-5 times

THE TABLE 4.5 SHOWS THAT THE

CUSTOMERS OPINION REGARDING THE
RATE OF INTEREST CHARGEABLE BY THE
MUTHOOT FINANCE

Opinion No of Percentage

Respondents
Excellent 22 44
Very good 12 24
Good 10 20
Fair 06 12
Bad 0 0
Total 50 100

Analysis
The above table shows that the customers opinion towards the rate of interest chargeable by Muthoot
finance. Out of 50 respondents (22N,24%) feels excellent towards rate of interest, (12N,24%) feels very
good, (10N,20%) feels good, (6N,12%) feels fair. None of the above
25
 Interpretation
The above chart was designed to understand the satisfaction of the customers with
the interest rate on gold loan offered by Muthoot finance. Here, 44% of the
customers believe that the interest offered by the Muthoot finance company is
excellent. While 24% of customers of Muthoot finance think that the rate of interest
is very good.20% of the respondents believe that the interest rate is good. 12% of
the respondents believe the interest rate is fair. None of the //

respondents thought that interest rate offered by companieswas bad.

TABLE 4.6 SHOWS THAT THE MUTHOOT
FINANCE STAFFBEHAVIOR TOWARDS THE
CUSTOMER REGARDINGVARIOUS FINANCIAL
PRODUCTS

Opinion No of Percentage

Respondents
Excellent 25 50
Very good 12 24
Good 10 20
Fair 03 06

26
 Total 50 100

Analysis
The above table shows that the staff behavior towards the customer regarding various financial products.
Out of 50 respondents (25N,55%) feels excellent regarding the staff behavior (12N,24%) feel very good,
(10N,20%) feels good, (03N,06%) feels fair.

Interpretation

Staff behavior is interpreted in the above chart. About50% of the organizations

thought that the behavior of staff is excellent. The share of customers who choose
very good as the option stands at 24% for Muthoot finance.20% of respondents
believe that staff behavior was good and 06% of respondents

believe that the fair respectively. None of the respondents tothe questionnaire
believe that the behavior of staff was bad.

TABLE 4.7 SHOWS THE CUSTOMERS OPINION

TOWARDS THE VARIOUS FINANCIAL LOAN
APPLICATION PROCEDURE OFFERED BY THE
28
 Opinion No of respondents Percentage
Excellent 22 44
Very good 13 26
Good 10 20
Fair 05 10
Bad 0 0

Analysis
The above table shows that the customers opinion towards the financial loan
procedure. Out of 50 respondents (22N,44%) feels excellent towards various
financial loan application procedure (13N,26%) feels very good, (10N,20%) feels
good, (05N,10%) feels fair. None of the respondents feels bad towards financial loan
application procedure.

29
 Interpretation

The above chart was designed to interpret the responseof customers to Muthoot
finance gold loan procedure. It was interpreted that 44% and 26% of Muthoot’s
respondentsbelieved that this factor was excellent and very good respectively. As
for option ‘Good’ and ‘Fair’ the share stands at

20% and 10% Muthoot finance. None of the respondents to thequestionnaire believe that
the Bad.

TABLE 4.8 SHOWS THE TIME TAKEN FOR

THE VARIOUS AND WHOLE
LOANPROCEDURE OF MUTHOOT
FINANCE

Opinion No of Percentage

Respondents
Less than 5 minutes 03 06
5- 10 minutes 07 14
11- 30 minutes 18 36
31- 60 minutes 22 44
Others (Please 0 0

mention)
Total 50 100

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Analysis
The above table shows that the time taken for the various and whole loan procedur

Muthoot finance. Out of 50 respondents (03N,06%) takes less than 5 minutes to

complete the loan procedure, (07N,14%) takes 5-10 minutes, (18N,36%) takes 11-
30 minutes, (22N,44%) takes 31-60 minutes.

Interpretation

The above diagrams represent one of the main factorswhich decides the fate
of any loan financing company i.e., time taken for clearing a loan. 06% of
respondents believed that it takes less than 5 minutes for the whole loan
procedure.
respondents who think the whole loan procedure takes5- 10 minutes stands at
14%. the option ’11-30 minutes’ was
selected by 36%.

The option 31-60 minutes was selected by 44% respectively. None of the
respondents believe that the whole loan proceduretakes more than 1 hour.

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TABLE 4.9 SHOWS HOW SATISFIED ARE YOU
WITH THE SECURITY STANDARDS OF
MUTHOOT FINANCE LIMITED ?

Opinion No of Percentage

respondents
100% 5 10
80- 99% 06 12
18 36
60- 79%
40- 59% 15 30
>40% 06 12
Total 50 100

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Analysis
The above table shows that the satisfaction towards security standards of Muthoot
finance. Out of 50 respondents (05N,10%) satisfied fully,(06N,12%) are 80-99%
satisfied, (18N,36%) are 60-79% satisfied, (15N,30%) are 40-59 % satisfied,
(06N,12%) are less than 40%

Interpretation
It is interpreted that 10% of respondents are 100% satisfied with their security
standards. It is also interpreted that 12% ofrespondents satisfied with the
security facilities. 18 respondents trusted Muthoot security standards is 60% -
79% respectively. The institutes had 30% of the respondents who believed that
the security standard was 40% - 59% trustable the institutes had 12% of the
respondents who believed that the security standard was greater than 40%
trustable.

TABLE 4.10 SHOWING THAT HOW THE

CUSTOMER WILLCOME TO KNOW ABOUT
MUTHOOT FINANCE FACILITIES

Opinion No of Percentage

respondents
Newspapers 08 16
Journals and 06 12

Magazines
T.V Advertisements 24 48
Notice 2 04
Friends and relatives 10 20
Others (Please 0 0

specify)

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 Total 50 100

Analysis

The above table shows that how customers will come to know about Muthoot finance
.out of 50 respondents (08N,16%) get to know about Muthoot finance facilities
through newspapers, (06N,12%) known about Muthoot finance facilities through
journals and magazines, (24N,48%) known through T.v. advertisements, (2N,04%)
known about Muthoot finance facilities through notice, (10N,20%) known about
Muthoot finance through friends and relatives.

Interpretation
The diagram shows the mediums through which the customer came to know
about Muthoot Finance Limited, here it is interpreted that newspaper as a
medium penetrates about 16% for Muthoot finance. The main medium of
advertising for the company is T.V. advertisements which stand at 48% for
Muthoot finance. Other sources like journals and magazines- Muthoot finance
is 12%. notice is 04%, friends and relatives are 20% is also play vital roles
in penetrating the market share ofthe company.

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TABLE 4.11 SHOWS THAT THE CUSTOMER RESPONSES
TAKING INTO CONSIDERATION THE RECENT
FLUCTUATIONS OF VARIOUS FINANCIAL SERVICES OF
MUTHOOT FINANCE ARE SUCCESSFUL IN PROVIDING
EFFECTIVE LOANS

Opinion No of Percentage

respondents
Strongly agree 10 20
Agree 30 60
Neutral 08 16
Disagree 02 04
Strongly 0 0

Disagree

35
 Analysis
The above table shows that the customer responses towards fluctuations
of various financial services. Out of 50 respondents (10N,20%) strongly
agrees the fluctuations in financial services, (30N,60%) agrees the
fluctuations in financial services, (08N,16%) neutrals, (02N,04%)
disagrees.

Interpretation
It is interpreted from the above diagrams that a majorityof the 60%
respondents of Muthoot Finance agrees to the fact that the company
are able to provide effective loans even after the recent fluctuations
in rates.
Those respondents who strongly agree to this fact constitute 20%
and 16% opted for neutral while rest 04% disagreed tothis fact.
36
 Interpretation

Here, it is interpreted a majority of the respondents agrees that financial

institutions assist by providing long payback period. This was closely followed
by the opinion that the respondents strongly agrees that 56% financial
institutionsassist by providing long payback period. Followed by neutral with
20% and strongly agree is 24%.

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 5.1FINDINGS

The major finding of the study can be summarized as follows:

 The management and employees of both the companies maintains a

good relationship.

 Most of the respondents (58.33%) have monthly income range

betweenRs.5000 – Rs 10,000.

 Media advertisement has an important role in spreading popularity in

case of Muthoot Finance.
 Majority of the respondents’ have the opinion that the behaviors of
company’s staff are cordial and friendly.

 Majority of the customers were satisfied with the services,hence

there was no need of complaints to be lodged.

 NBFCs score over banks on two fronts despite charging higher

interest - quick approval and disbursal of loans,and less
documentation. An NBFC at the most takes 30 minutes to give the
loan after verifying the gold, and the only document required is an
identification proof of the person pledgingthe gold.

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 Muthoot being the more established among the two knows the
infrastructurerequirements to grow in this industry.

 It was also interpreted that Muthoot Finance was successful in

providing long pay back periods to its customers. This is also
another reason for itssuccess in this industry.

5.2 SUGGESTIONS

 Muthoot should work on its marketing strategies to improve its

market share.

 Most of the people are unaware of the different financial products

offered by Muthoot. So, the company should take necessary steps to
create awareness among the public.

 The company can also give attractive offers to old customers as well
as prospective new customers.

 The company can also look into new ventures as it has established
itself asthe leader in gold loan financing field.

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 CHAPTER-6

CONCLUSION

It helped me to find out the different factors responsible for the success of the Muthoot finance
companies.

The major finding that can be concluded from this study is that Muthoot Finance Limited is still
the best gold financing company in India.

This experience has helped me gain knowledge about the business of

gold loanfinancing in India.

43