Throughout Indian history, specific social groups have dominated the business landscape – Marwaris, Kacchis, Parsis, Sindhis, etc. This history has been captured by various books such as The Stories of Indian Business or Harish Damodaran’s India’s New Capitalists. Here’s a review of a new book by Raman Mahadevan called Fortune Seekers, which dives deep into one such business community, the Nattukottai Chettiars. The reviewer Amol Agrawal himself is an author of a book about the history of private banking in South Canara.
Fortune Seekers talks about how the Chettiars rose from humble origins to become successful bankers spreading across South and South East Asia, thanks to the British who brought in changes to the zamindari system in India.
“Due to the high assessment of the land revenue, the zamindars were constantly under financial pressure and often resorted to borrowing from creditors. The Chettiars saw an opportunity and decided to enter the field of moneylending and banking. In order to borrow money from the Chettiars, the zamindars often leased them land. The Chettiars ended up acquiring large tracts of land when the zamindars could not repay these loans.
The Chettiar community opened bank branches via their joint family network, or valavu.… The businesses were run by the proprietor of the firm known as mudalali, who appointed agents, or melals, who spread to different parts of South Asia and South-East Asia and set up branches. The agent was recruited from the Chettiar community and trained in banking practices. Often, younger family members were sent to these branches for training and exposure.
… Chettiar enterprise was not limited to Indian shores but spread its wings outside India. There were two major reasons for this. First, the other banking communities, such as Marwaris and Multanis, had entered southern markets. Second, the opening of the Suez Canal transformed the world of ocean commerce, leading to the opening of new commodity markets in South and South-East Asia. The Chettiars, who were already present in these regions due to trading, were perfectly placed to exploit these new opportunities with their banking network.
In Ceylon, the Chettiars acted as financiers of the trade commodities such as cotton, coffee, tea, and rubber. In Malaya, they financed tin and rubber. They even developed a new financial instrument called the Chetty Insurance and Mortgage Bond, which not only provided loans to shipowners, who were mostly Chinese, but also insured them against repayment if the ship sank. They also gained access to other areas from Malaya such as Sumatra Island, Hong Kong, and Siam. In Burma, the Chettiars financed rice and timber. Of the three regions, Burma was the biggest catch, and their investments in Burma outstripped the investment in other regions.”
Two PSU banks of today, Indian Bank and Indian Overseas Banks owe their origins to this community. The book talks about how eventually the community’s successful reign ended with the rise of nationalism post World War I that drove them out of their overseas forays. “The peasants in foreign countries blamed the Chettiar moneylenders for their misfortunes. The Chettiars did not help their cause either as they kept to their own communities abroad and did not integrate with the locals or build hospitals and schools as they did in India.”
A few business groups from the community such as the Murugappa group still continue to prosper. “ The book laments that the subsequent generation of Chettiars did not really catch up with their counterparts in other business communities. The younger generation opted out of banking and business and chose to take up white-collar professions. Many of them studied at educational institutions established by Chettiar families, such as Annamalai University, Chidambaram, and Thiagarajar College, Madurai; they work in the IT and financial sector and are based in the UK, the US, and Singapore. … The book ends on a poignant note, with its observation that the common man today associates Chettiars with their cuisine and not their entrepreneurial ventures.“
If you want to read our other published material, please visit https://marcellus.in/blog/
Note: The above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. The information provided is intended for educational purposes only. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India (SEBI) and is also an FME (Non-Retail) with the International Financial Services Centres Authority (IFSCA) as a provider of Portfolio Management Services. Additionally, Marcellus is also registered with US Securities and Exchange Commission (“US SEC”) as an Investment Advisor.
