abhishreshthaa
Abhijeet S
Chit Fund Company is a non banking company legally registered and approved by the “Register of Co-Operative Societies and Chits” for upliftment of the people in the society.
BRIEF INTRODUCTION ON CHIT COMPANIES
Chit fund institution is indigenous, simple, easy and readily understood and widely accepted by the rural and urban middle class people. It is a user’s friendly savings–cum borrowing instrument. Its aim is to pool small savings for being managed by a foreman who will act as a trustee-cum-supervisor for the process of collection and allotment of the pooled amount to catch member by rotation. Chit funds represent a traditional form of saving-cum-credit institution evolved long before the banking system was introduced in rural India.
Chit funds cater to the needs of the rural as well as urban middle class people. They meet their specific needs for large family functions, festival, educational, housing, agriculture, vocational (cottage industries etc…) and medical expenses.
The most significant aspect of the chit funds business is the element of mutuality and participation by every subscriber.
In chit business, the interest is determined by the supply and demand situation and is not imposed on the user by any external agency. It provides a right to the subscriber to access credit on providing necessary security, without any pressure on his self respect.
The field is fully self-financing and completely independent of external support unlike rural self-help credit groups which lean on government for financial needs.
According to a study done by the Asian Development Bank, Chit subscriptions to 2% of the entire bank deposits of Southern Regions during 1984.
The entire fund is brought in by the subscribers. There is no external borrowing. The application of funds is also decided by the subscribers themselves. The foreman acts as a Trustee and Agent.
The premises are also situated at places within easy reach. There is a mutuality and transparency in the proceedings. The foremen are easily approachable and are responsive to the needs of the subscribers according to the financial status and capacity of the subscribers.
e.g. the significance of the chit business can be realized from the fact that in Tamil Nadu there were about 4000 foremen who organized about 40000 groups involving about 10,00,000 subscribers and about Rs. 2000 crore annual turnover as of 1993. In 2001, the volume of the chit business may be estimated at Rs.10,000 crore. The chit’s popularity is due to its simple and easy procedures.
BRIEF INTRODUCTION ON CHIT COMPANIES
Chit fund institution is indigenous, simple, easy and readily understood and widely accepted by the rural and urban middle class people. It is a user’s friendly savings–cum borrowing instrument. Its aim is to pool small savings for being managed by a foreman who will act as a trustee-cum-supervisor for the process of collection and allotment of the pooled amount to catch member by rotation. Chit funds represent a traditional form of saving-cum-credit institution evolved long before the banking system was introduced in rural India.
Chit funds cater to the needs of the rural as well as urban middle class people. They meet their specific needs for large family functions, festival, educational, housing, agriculture, vocational (cottage industries etc…) and medical expenses.
The most significant aspect of the chit funds business is the element of mutuality and participation by every subscriber.
In chit business, the interest is determined by the supply and demand situation and is not imposed on the user by any external agency. It provides a right to the subscriber to access credit on providing necessary security, without any pressure on his self respect.
The field is fully self-financing and completely independent of external support unlike rural self-help credit groups which lean on government for financial needs.
According to a study done by the Asian Development Bank, Chit subscriptions to 2% of the entire bank deposits of Southern Regions during 1984.
The entire fund is brought in by the subscribers. There is no external borrowing. The application of funds is also decided by the subscribers themselves. The foreman acts as a Trustee and Agent.
The premises are also situated at places within easy reach. There is a mutuality and transparency in the proceedings. The foremen are easily approachable and are responsive to the needs of the subscribers according to the financial status and capacity of the subscribers.
e.g. the significance of the chit business can be realized from the fact that in Tamil Nadu there were about 4000 foremen who organized about 40000 groups involving about 10,00,000 subscribers and about Rs. 2000 crore annual turnover as of 1993. In 2001, the volume of the chit business may be estimated at Rs.10,000 crore. The chit’s popularity is due to its simple and easy procedures.