Popular among low income groups, salaried and self-employed individuals, a chit fund involves members agreeing to deposit a predetermined amount of money for a specific period. Members take turns to receive the entire pool of funds.
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Bengaluru: With women receiving cash benefits under the flagship guarantees, the state government has sensed an opportunity to scale up its fledgling chit funds business that will soon get an app.
This is one way the Siddaramaiah-led Congress government wants to build an economy around the guarantees, which are giving every household an estimated Rs 4,000-5,000 financial assistance per month.
Under Gruha Lakshmi, 93 lakh women are getting Rs 2,000 every month. Women are also saving money with Shakti, the free bus travel scheme. The plan is to get these women to start saving.
For this, authorities have zeroed in on the chit fund business run by the Mysore Sales International Ltd (MSIL), which has a turnover of Rs 305 crore and a low subscriber base of 22,000. This pales in comparison to Kerala, where the state-run chit fund business is worth a mammoth Rs 27,000 crore.
Popular among low income groups, salaried and self-employed individuals, a chit fund involves members agreeing to deposit a predetermined amount of money for a specific period. Members take turns to receive the entire pool of funds.
“MSIL has agreed to give a fillip to its chit fund business in the backdrop of women receiving cash under the Gruha Lakshmi scheme,” said Additional Chief Secretary (Finance) LK Atheeq, who has held meetings to discuss creating a ripple effect for the guarantees.
MSIL managing director Manoj Kumar told DH that the chit fund business has the potential of becoming a Rs 10,000-crore venture.
“Our chit funds business is almost localised to a few urban districts," Kumar said. "We haven’t penetrated into rural areas. Now, with each household receiving benefits every month, money can be saved."
The MD said "returns are quite decent (13% to 15%) depending on the group” and added that money will be assured as MSIL is a government agency.
Kumar is creating an "institutional mechanism" to accelerate the chit funds business. “We’re looking at having a mobile app that citizens can use to not only enrol, but also check the progress of their chit fund,” he said, adding that software development is underway.
As in the case of the Life Insurance Corporation (LIC), the government will appoint ‘Savings Sakhis’ as agents who will get incentives for every enrolment for the chit funds business.
Uma Mahadevan, Additional Chief Secretary (Skill Development, Entrepreneurship & Livelihood), who is involved in the effort to create guarantees-based spin-offs, said women can put the Gruha Lakshmi money into small savings for children's education, set up a business or medical emergencies.
"Women should quickly get into the habit of savings." she said.