History Of Chit Funds

By Author: Santhosh Kumar
Total Articles: 54
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Chit Funds are indigenous financial institutions unique to South India and predating commercial banks. They have stood the test of time, as evidenced by the growth in the number of chit fund companies in the South. However, the importance of any financial institution cannot be judged by its numerical strength alone, but by its performance. Tracing back the history of the origin of chit funds reveals that they evolved at a time when banking facilities had not developed, thus filling an important credit gap in the economy. But with the growth of banks, chit funds were doomed to closure. However, on the contrary, vast expansions in the chit fund business were witnessed over the years, neck to neck with that of the banking system. Proof enough that chit funds continue to fill the credit gap in the developing economy of our country. Today chit fund companies are recognized as important credit and investment agencies.

What should investors do to prevent chit fund scam?

• Check for the credibility and creditworthiness of the company and its promoters.

• Warn people about fraudulent companies ...
... & Report them to concerned authorities.

• Opt for state-run chit companies and go with firms with a long record and financially sound

promoters.

• Understand the difference between Organised chit fund schemes which are required to register with the Registrar or Firms, Societies and Chits and money circulation schemes.

• Invest in a scheme with no incentives for subscribers to bring in more people to the scheme.

• Implementation of easy-to-use web-based Chit Fund Management system (CFMS).