Mes­sage from Gen­eral Sec­re­tary, All-In­dia As­so­ci­a­tion of Chit Funds

Consumer Voice - - Bfsi -

Chit funds are preva­lent in In­dia from time im­memo­rial, even be­fore the ad­vent of bank­ing. A re­cent elab­o­rate study by The Small En­ter­prise Fi­nance Cen­tre of IFMR, Chennai, un­der the guid­ance of Prof. Mu­dit Kapoor of ISB Hy­der­abad and Prof An­toinette Schoar, MIT Michi­gan, un­der the aegis of Bill & Melinda Gates Foun­da­tion, speaks vol­umes on the strength of this in­dus­try. Though the buz­zword ‘fi­nan­cial in­clu­sion’ is of re­cent ori­gin, chit funds have been do­ing it since in­cep­tion, cater­ing to the un­served pop­u­la­tion in re­mote ar­eas, and are one of the most pop­u­lar and trusted forms of in­for­mal fi­nance. How­ever, it is painful to note that this an­cient sys­tem is of­ten pro­jected in bad light, and the fail­ure of mul­ti­level mar­ket­ing com­pa­nies/ponzi schemes, de­posit tak­ing com­pa­nies, etc., is re­ported as that of chit funds, whereas the fact is that con­ven­tional chit com­pa­nies can­not and does not ac­cept de­posits from the pub­lic at all. The need of the hour is to run pub­lic aware­ness cam­paigns, high­light­ing the dif­fer­ence be­tween chit fund com­pa­nies and resid­uary non-bank­ing fi­nance com­pa­nies (NBFC) so that the ig­no­rant pub­lic does not lose their hard-earned money, as it hap­pened in the case of Saradha. We ap­pre­ci­ate the role of Con­sumer Voice in com­ing out with an ar­ti­cle on the in­tri­ca­cies of this fi­nan­cial in­ter­me­di­ary, for the ben­e­fit of the in­vest­ing pub­lic, leg­is­la­tors and ad­min­is­tra­tors. Mail at gensecy@aiacf.com

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