Finance & Accounts |
Banking & Insurance Professionals |
Micro finance and sustainable development |
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Activity:
53 views;
last activity : 03 28 2011 04:51:30 +0000
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Innovative access to finance
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Banks are not people friendly
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A good way of investint/ finance
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Chit funds are people friendly
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Lack of Bank Branches in Rural Areas
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According to me Chit-funds are mainly popular due to the no. of middle class and poor people that are there in the country and some innovative way to access finance, and many of these people are not under the banking sector and it is said that people find the chits more advantageous as they require less collateral and documentation. The chit amount is collected from the participants at their doorstep on a flexible when the participants are able to pay. The businessmen also find it more useful for easy money rotation than bank loans. And this makes chit-funds click than anything else for them, though there are many cases of Fraud in these, but then still people go for these, and this is a curious case which needs to be understood by banks and other financial institutions like why still chit-funds are popular in India. |
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As rightly pointed out by Swati, it is easy access to funds. With 2 known person's guarantee, chitfunds will fund upto Rs.2.00 Lakhs. The interest may work out more but the procedure is simple. My answer to Asokeji...I move day in and day out with Banks. Without a reference, banks refuse to recognise anybody as a human being. It sounds rather harsh.. but the fact is that banks are willing to cater to the needs of upper class than a common man. When RBI asks them to bend before High Networth Individuals, banks crawl...
We are better that way. it took me 3 years to throw away my credit card which was used just once (on a hospitalization) and had to 200% of the capital. Hell with the banks. Chit fund ROCKS!
What Swati says is more the reality. More poorer people benfit from Chit funds. I have seen here in Kochi the Agent coming to a shoping complex with collection bag, mostly in the evenings and collecting small amounts from say Rs.10 to 200 depending on the cashflow the business is achieving per day. If the don't have enough of cash flow probably they postpone payment for another day.
Asoke's queiry as to how to include the marginalised into mainstream banking is an economic and a philosophical question to answer. It all depends on the political will transfered to future generations of the nation by our founding fathers. What is the meaning of a Nation state, what values we need to uphold in our political will which trnsforms into political processes.
If we give more value to endowing the citizen, then process of endowment and phiosophy of endowment meted out should be clearly defined. Philosophy means how things work. What sort of truth should manifest in out processes should be clearly visioned. Visioned means what the target we decideto achieve in manifesting truth in processes.
Then how the environment should be designed and the culture defined to accomodate this vision or endowment. Whether people should be self improving, whether efficient environment should be facilitated, whether social justice givem more weight, how we distribute environmental costs, whether there should be social security payment as a way of meting out social justice and distribution of environmental costs, how social costs can be reduced to infuse more efficiency in the economic environment, whether welfare should be our goal for citizen etc; etc;. This is a rundown on few of the steps need be taken to design the poitical will, what level of skill level should be generated in citizen to maintain and sustain the economy, how much wealth the nation must generate as a Nation state to maintain and sustain the infrastructuer for this, A Nation State is an entity where people conglamorate with similar belief systems and goals.
Once we have a clear grip over these things, then we are on ou way to an inclusive processes where each citizen will be endowed enough through rightful political process to use all types of Banking and welfare.
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Banking in India is a institution for the rich.If you go to a bank the type of service one gets is very prominent.The person with faT bank account can get everything done in managers office,whesras a person who has a avg or minimum balance is really treated as dirt in nationalised bank. one needs to go to a bank where pension is distributed .it is aas if the bank is giving handouts. So what I man to say is that the bank caters to you and for your loans only if you have fat balance and can keep security. wheras for ther real needy who want to eke out a living BANKS are useless. Thats where these chit funds play very supportive role.they are really helping the Needy.Though there are cheating both ways,I feel its Understandable In Nationalised banks they need your savings and deposits .when yoou go for a loadn they ask questions as if you are a born cheater. In India small chit funds are popular with avg business people as lomg as the banks show high handed tactics. |
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I agree with Mr Charles Davison. Even now, our so called nationalised SBI, treat you (loan seeker) as if you are a cheater. They don't even bother to answer your queries properly ie with respect. There is a requirement of "mind change" in our bank staff. They required to be motivated (kicked) to understand the poor and middle class customers. With Regards, R Varadha Rajan
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Chits are still the good means of investment considering other forms . Its always better to go for chits than with home loans , Home loans even if its very less interest ,it will become a burden and the interest is very high . I always consider chits is very good investment model for anyone .Kerala is place with lots of chits and kuries companies. I perssonnaly keep atleast some chits for the investmnet purpose. |
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In our country most of the chit funds are unauthorised and there fore investments in such funds do not get questioned by any of Government revenue departments. For very same reason of unauthorised functioning there is no formalities of documentation is involved, least paper formalities unlike banking companies. It is an informal way of financing to the rural and uneducated population, eventhough unsecured it is running with the secured feeling by faith and interrelationship among the members of the fund. All aware that investments in these funds are with high risk for the reasons stated above, chanes of loosing the money to the investor is quite common because it unauthoried, run by uneducated, business run with the intention to defraud etc. Its popularity gets dim for the reson that the rules and regulations governing the chit funds are very stringent, to run this business formally heavy security deposit is required to be deposited with the registering authority, there are certain other strict riles too to controle this business by the Government authorities. It is more remunerative to the members who isvest in it and keep quite, very same time it is a costlyest way of finance who opt for finance through such chit funds. |
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As chit finance in popular in our country just because people of rural India has got trust on the people of chit finance & even people are benefited from it. But apart from this Lack of Bank Branches in Rural areas may be a one of the reason, which led Chit Finance Business & even now working it successfully in our country. |
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