|
| Rs 11,088 cr floating via chit funds in 3 southern states |
| BS Reporter / Chennai Oct 30, 2009, 14:47 IST |
|
Around Rs 11,088 crore are being circulated via chit fund schemes in the southern states of Tamil Nadu, Andhra Pradesh and Kerala. Around 58 million house holds have participated in chit fund schemes, according to a recent study released by Institute for Financial Management and Research (IFMR). The study was funded by Bill Gates foundation Bill and Melinda Gates Foundation.
Speaking to reporters in Chennai Preeti Rao and Sharon Buteau of Small Enterprise Finance Centre (SEFC) at IFMR said that compared to other states in the country southern states are well matured and organised when it comes to Chit Fund Industry. The two researchers have been studying the industry in Tamil Nadu, Andhra Pradesh, Delhi, Kerala and Karnataka for the last three years.
They noted, till 2006, in Tamil Nadu around Rs 3,700 crore was circulate via chit schemes, in Andhra Pradesh around Rs 7,200 crore, Kerala Rs 188 crore. Around 58 million houses population were part of these schemes.
Percentage of household participating in chit funds is between 5 and 10 per cent of the total household population in each state, except for Delhi and Karnataka, added Rao. She added, number of chits schemes registered is going down while value of the chit schemes is going up- this might imply that chit funds are moving towards high values schemes from the low value schemes.
The per centage of chit schemes with equated monthly installment (EMI) less than Rs 2,000 and chit vale less than Rs 50,000 is decreasing over the years.
She noted, 83.1 per cent the people participating in the chit schemes are men who are in the age of around 43.4 and majority (43 per cent) of them are self-employed, while 37 per cent are salaried, 10 per cent housewives, 5.3 per cent are retired.
One of the major reasons they participate in chit funds is to save, added Buteau. She said, people prefer to participate in chits funds compared to banks since it gives them better returns on savings and better loan interest rates and also less paperwork involved in chit funds and they require lesser collateral/guarantee from their members.
The two researchers met around 1,657 members in 91 districts and studied 1,543 schemes till 2006 have stated that one of the main reasons for people to look at chit funds is “access to banks and especially to credits” more than 30 per cent of the chit fund members have faced a situation where they were in need of money but could not win the chit auction.
Commenting on the security aspects, she said, 96 per cent of registered chit members consider the chit company they participate are safe. M V Vaidyanathan, director, The Balussery Benefit Chit Fund Pvt Ltd noted that till now the companies which cheated public money were not chit funds, there is a misconception among the public. He noted, the companies which cheated and ran off with the public money are companies which were accepting money from the public, whereas chit companies are not allowed to do so.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
