The Weigh­tages

Consumer Voice - - Bfsi -

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.

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