Start-ups try to draw youth to chit funds

The chit fund industry is seeing the emergence of start-ups, mostly as aggregators for brick-and-mortar players, on the expectation that technology and ease of operations will attract a younger generation of customers.

 

Kyepot, Chit Monks and Credright have investments by chit funds.

 

“These start-ups are helping chit funds widen their reach and are offering customers more options than are available in their neighbourhoods,” said TS Sivaramakrishnan, director of Balussery Benefit Chit Fund and general secretary of the All India Association of Chit Funds.

 

“Youngsters are interested in investing in chit funds, but lack adequate information,” said Sidd Gandhi, founder and chief executive officer of Mumbai-based KyePot, an aggregator of chit funds offering technology support. He expects demonetisation and digital payment options will boost the industry. KyePot recently raised funds from investors.

 

CredRight, a Hyderabad-based digital lending company, has identified a different opportunity. Almost 30-35 per cent of chit fund customers are micro and small businesses. While several bidders may be in need of money, only one can win an auction at a time. CredRight lends to the other bidders till they win the auction.

 

“There are around five million customers in this segment. We are growing fast and expect to reach a considerable book size by March 2018,” said Neeraj Bansal, co-founder and CEO, CredRight. Shriram Chits, Balussery Benefit Chit Fund and Kireeti Soft Technologies are investors in CredRight.

 

ChitMonks, a marketplace for promoting chit funds, was working on expanding operations to become a one-stop solution, said Pavan Adipuram, its founder and chief executive officer. “Almost 80 per cent of the leads we generate for chit funds are new customers,” he added.

 

ChitMonks raised Rs 1 crore from angel investors at the TiE ISB Connect event held in Hyderabad recently.

 

Adipuram said one of the major challenges was to shed the ill repute of the chit fund industry. The All India Association of Chit Funds says scams take place in unregistered, risky group financial schemes that are often called chit funds. He added there was a big opportunity for technology companies in the segment, including helping existing players to adapt to digital payment modes.