Financing the Bottom of the Pyramid
Muthoot drew inspiration from C.K. Prahlad's book, “The Fortune at the Bottom of the Pyramid,” which sought to demonstrate how companies worldwide could identify, build and profit from new markets among the word's several billion poorest people, while at the same time help alleviate poverty. Five years after Muthoot first read the book, the ideas are no longer theory to him. He has proven that they work.
"Within four years we have served more than 1.3 million women by providing them finance, training and welfare," he says. "All of them come from remote, rural villages, and we have tried to make them self-dependent entrepreneurs of their own micro-businesses. Most importantly, we go to these remote places and serve them on their doorstep."
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The wellness of clients is equally important and the group conducts financial literacy classes, develops links to markets, runs medical wellness camps and provides water purifiers to those without safe drinking water.
Muthoot also spotted an early opportunity within the vast shortage of low-cost housing in India and was instrumental in setting up the Muthoot Housing Finance Company, of which he is managing director. The company typically offers home loans of up to USD25,000 for a period of 15 years, lending mainly to the low-income, informal sector who cannot secure funding from the formal banking.
Muthoot has instead built up a field-based assessment model that assesses income on the basis of cash flow, without any formal income documentation. Through this approach the company has been able to fulfill the dream of home ownership for more than 5,000 customers.
AdvertisementPower dynamics within these homes are changing too. A recent survey by independent finance agency IntellCash has shown that financial decision-making between husbands and wives has begun to equalize, a result of focusing on women's financial empowerment by Muthoot Fincorp.
"Many women in Indian households are not involved in any economic activities,” says Muthoot. "They haven't even realized their potential. We aim to uplift them to become part of mainstream economic society."
Advertisement(The article is written by Grant Schreiber, Real Leaders)
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