Chit fund industry in Kerala in crisis: Functionary

Non-Banking Financial firms and chit fund industry in Kerala, providing gainful employment to two lakh persons directly and about one million indirectly, spread over 15,000 units, were under severe crisis following 'impracticable' directions by the Government from time to time, a functionary of the state Chits' Companies Association today claimed.
State President of the United Chits' Companies Association (Kerala), M M Prasad told newsmen here today that though the state government had issued an order recently stipulating that chits commenced from outside the state should get registered before June 30, no facilities had been provided for the purpose.
He said orders issued in this regard by Supreme Court in April 2012 and Kerala High Court on May 28 last had made it clear that the appropriate authorities in the State shall not interfere with the peaceful conduct of business under the Kerala Money Lenders Act, 1958 and the Kerala Prohibition of Charging Exorbitant Interest Act, 20l2.

Prasad welcomed the Government's 'Operation Kubera' programme with a view to punishing those who conducted business violating the provisions of the relevant Acts.
Prasad said the management of the chit companies were ready to submit documents required by the authorities at their office for inspection.
He said that the apex court and high court had made it clear that the chits commenced from outside Kerala could be operated till their expiry. Hence the order of the state government for registering chits commenced from outside ran counter to the court orders, Prasad claimed.
After a crackdown on loan sharks for their illegal activities, the Kerala Government recently decided to regulate the functioning of non-banking financial companies and chit funds in view of complaints of the exorbitant interest rates they charge from borrowers.