Age of Company (20 points)
The loyalty factor among members is higher when they know that the company has been operational for a while. The consumer feedback justifies the weightage of 20 points.
Paid-up Capital (20 points)
This is an essential variable influencing a consumer’s decision to go with the company. The capital represents the financial strength and repayment ability of the promoter.
Investment in Groups (20 points)
Investment in group chits indicates popularity among consumers and thereby contributes to the company’s profits.
Number of Groups (10 points)
Not much influential, but it does persuade people to choose the company – after all, more the groups,
more the cash flow with the company. Also, it may be noted that the groups are divided into different periods of maturity and chit amounts as per the consumers’ convenience and needs.
Membership Verification (5 points)
The chit business relies on word-of-mouth, but this variable is sometimes the root cause of the ‘black sheep’ entering the group and spoiling the reputation of the company over a period of time. This reiterates
the importance of companies taking due precautions like verification of identity at the time of admission of member.
Collateral Security/Personal Sureties (5 points)
Such collateral is applicable either at the time of admission or at the time of winning the prize chit. This is also one of the causes of bad debts due to nonpayment of subscriptions after winning the chit. We have assigned five points for companies not taking collateral security/personal sureties (as it benefits members).
Maximum Bid (5 points)
The cap is at 40 per cent as per the Act. This means that no bid can be made at more than 40 per cent discount on bid amount (suppose the chit contribution for 25 months is Rs 50,000 @ Rs 2,000 per month; prize chit will be Rs 50,000 minus the discount). Stronger companies can give the chit member a discount up to 25 per cent, while younger companies may give the same up to 35 per cent.
Company Website (5 points)
There are very few companies having their own websites, probably reflecting their financial strength. Software and Internet technology have minimal presence in chit-fund companies.
Member Feedback (10 points)
Much can be read into what members think of their own chit-fund companies and they have been quite frank.