When Nattukottai Chettiar were major financial players in Penang and Singapore

When the British began making inroads into Southeast Asia in the early 19th century establishing trading posts that would eventually become colonies, an enterprising community in Tamil Nadu sensed an opportunity. The region would experience a resurgence of economic activity and the community could make a fortune by financing it. His instinct paid off. Over the years, the Nattukottai Chettiar community – whose men distinguished themselves in the Straits of Malacca with their dhotis, shaved heads and vibhuti on their foreheads – became the main financiers of trade in the region.

“The centuries-old tradition and folklore of the Chettiar community has suggested the existence, from earliest times, of trade relations between the Chettiars and Malaysia,” wrote Raman Mahadevan in a study published in the Economic and political weekly in 1978. “However, these commercial relations, sporadic and temporary, must be clearly distinguished from the modern phenomenon of organized penetration of Chettiar capital from the beginning of the 19th century into the regions of the Malay Peninsula that came under colonial rule. , namely Malacca, Penang and Singapore.

The Nattukottai Chettiar settled in Malacca (now Melaka) in 1808 and had a strong presence in Singapore in the 1820s and Penang in the 1840s. They lent money to a wide range of people, from small farmers to large trading companies and miners, using contracts that could be enforced within the legal and administrative systems set up by the British.

“The relaxation, if not the abandonment, by the British of several restrictive mercantilist arrangements of the Dutch, the substitution of the monopolistic trade policy of the Dutch by a policy of free trade, the creation of a modern tax system in place of the semi-feudal revenue-collecting devices, and finally, the establishment of a unified political and administrative system, were some of the measures which created this favorable or conducive climate for trade and commerce, and thus attracted a large number of traders, merchants and businessmen from Asia. origin of this region,” wrote Mahadevan. The Chettiars were joined in the region by traders from different parts of India and China.


Before the arrival of Western banks in the colony called Straits Settlements (comprising Penang, Singapore and Malacca), the Chettiars were the most important financiers in the region. They provided long and short term loans to Indian and Chinese small and medium traders. Loans were granted on movable and immovable property as well as on promissory notes.

When British and European banks established themselves in the straits in the mid-19th century, they lent only to the major European and Chinese trading houses, leaving plenty of room for the Chettiars to operate. Another role fulfilled by the Chettiars was that of intermediary between small and medium traders and banks.

“Their knowledge of the creditworthiness of small and medium-sized Chinese and Indian traders, coupled with their financial position and reputation as shrewd and competent businessmen, has enabled the larger chettiar companies to obtain financial accommodation from the banks in the form of fixed loans and overdrafts on current accounts against the guarantee of invoices or title deeds, in addition to invoice discounting,” wrote Mahadevan.

The community is also believed to have benefited from the opium trade. In his 1954 book titled Silver Kingdoms: One Hundred Years of Eastern Banking, British writer Compton Mackenzie wrote that “most of Singapore’s opium trade passed through their hands”. He added that the Chettiars were the main agents for the exchange of banknotes between Chinese merchants and the Chartered Bank of India, Australia and China. “It was very rare for a Chettiar to default on his obligations, and the Bank’s ties with the Chettiars and the Chinese grew so rapidly that by 1872 almost all the local bills discounted were acceptances drawn two or three months by these groups on Chinese opium buyers,” Mackenzie wrote. Members of the Chettiar diaspora in Singapore who were contacted by this writer disputed Mackenzie’s claims about the community’s role in the opium trade. opium.

The Chettiar community’s money-lending and middleman businesses flourished for decades after Western banks entered the strait. “Their success was based on their willingness to lend to customers, who lacked the financial capacity to borrow from banks, on shrewd investments and on interlocking financial agreements between Chettiar businesses,” wrote the academic Paul Kratoska in the June 2013 edition of the journal. Journal of the Malaysian Branch of the Royal Asiatic Society.

In 1883, Singapore had only four commercial exchange banks but 28 Chettiar companies, according to records from the Singapore Government Gazette. Several Straits Chinese businesses have thrived on the financial services provided by the Chettiars. Among them was Loke Yew, a Chinese tycoon who played a key role in the development of Kuala Lumpur.

Work at home

It was a practice in the community to set up kittangis, which means warehouses in Tamil. A precursor to the work-from-home model imposed by the pandemic, the kittangi would serve as an office by day and a home at night, where community members slept on mattresses on the floor. According to Roots, a website run by the National Heritage Board of Singapore, at one time the market street of the town had seven kittangis which housed 300 to 400 chettiar businesses. Similar groups of Chettiar money lending businesses existed in Penang and Malacca.

Once the community was established in the strait, the Chettiar began to bring their families and establish an active cultural life. In Penang, the community built the Arulmigu Balathandayuthapani Kovil (better known as the Waterfall Hill Temple) in 1854. It has been renovated and extended several times and is now one of the focal points of the Thaipusam festival in Malaysia. The Chettiars also built the Sri Thendayuthapani Temple in Singapore in 1859. A more modern structure replaced the temple in the 1980s and is popularly known as the Chettiar Temple.

“The temples the Chettiars established in India and Southeast Asia were central to their success,” Kratoska wrote. “Dedicated to Murugan, son of Lord Siva, these temples were important community centers where the Chettiars exchanged information and met periodically to set loan interest rates within the Chettiar community.”

Thaipusam was used as a networking opportunity, as people from many parts of the Malay Peninsula and Singapore traveled for celebrations held in towns that were strongholds of Chettiyar. “The Chettiars donated a percentage of their profits to the temples, which in turn deposited the funds with the Chettiar businesses in proportion to their size and capacity,” Kratoska wrote, adding that it was seen as a way. to involve Lord Murugan in their affairs and to ensure that the dealings were honest so as not to risk the wrath of their deity.

Business downturn

The community managed to remain relevant in the region’s financial services industry until the 1920s.” The Chettiar Money Lending Companies in Malaysia, which had on the whole achieved good business through their indirect association along with the rubber and tin industries, suffered a setback with the onset of the depression in 1929,” Mahadevan wrote. “The effect of the depression on the colonial Malay economy was quite severe; the two main industries, namely rubber and tin, which depended on the world market for their prosperity, were particularly affected.

When world prices for these commodities crashed, the owners of the estates were unable to repay the loans to the Chettiars, who seized their land and property. But in a depressed economy, these assets lost value and the community lacked an adequate flow of capital. Government restrictions on the sale of land have made it difficult for the community to sell their seized assets, plunging many into penury.

World War II and the Japanese invasion of British colonies in Southeast Asia followed the Great Depression and the Chettiar community lost its grip on the financial industry in Malaysia. Even before the British left Malaysia in 1957, modern banking services were beginning to become available to small and medium-sized businesses in the region. In the early 1970s, about 40 Chettiar money lending firms operated in Singapore from Market Street kittangis. In 1977, the area that had been home to the Chettiars since the 1820s was redeveloped.

The Nattukottai Chettiar community remains economically active in Singapore and Malaysia, where its members consider themselves a “micro minority”. History written in these countries generally respects the community’s contribution to the development of economic activities in the region.

Ajay Kamalakaran is a Mumbai-based freelance writer and journalist. He is a Kalpalata Fellow for Historical and Heritage Writings for 2022.

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