The Journey Of Chit Funds
Chit fund is one of India's miscellaneous credit and savings’ system. Chit fund organizations generally come under the microfinance industry. Chit fund schemes are organized formally by registered Chit Fund companies with a group of subscribers or informally among friends, neighbors, or relatives.
Looking At History
The concept of Chit funds has been there since ancient times. It was first described by William Logan in 1887, the collector of the Malabar district. It was mentioned again by economic historian Edith Simcox in 1894, that Chit fund lotteries were used in South India to raise money for weddings.
Chit funds were very popular in Kerala during the ’90s and underwent major formalization during this century. Due to rigidity of the 1975 Kerala Chitties Act, there was a decline in fund organizations and the fund organizers moved to other states to conduct business. Chit funds weren’t restricted to farmers and were participated by salaried persons and merchants as well.
Chit funds became popular in the southern states of India. Around 5 to 10% of urban households began participating in registered Chit fund organizations. The concept did not catch up much in north India, except for Gujarat, Delhi, Haryana, and Maharashtra.
Today, Chit funds is one of the most sought after saving and borrowing option across India
