Original Financial wizards - Kerala.style

Original Financial wizards - Kerala.style

Kerala is also a land of financial wizards, who discovered the Chitty fund business (popularly known as “Chitty”). Long time back when banks were not born, chitty was the lone hope of ordinary people to meet their financial exigencies. It is still a flourishing business in this state. As a matter of fact, until recently, the chitty business in volume exceeded bank transactions by leaps and bounds.

It is the ingenuity of the business that is remarkable. Chitty business does not require big or even small buildings. It needs no capital, no raw material and no marketing or documentation charges. Incredible as it may sound.

One who starts the business acts as the promoter. He approaches his neighbors and those who are willing to cooperate. When their consents are received, the promoter enrolls them as members accepting the first installment. The promoter (who is originally called the “thalayal”) fixes a particular sum as monthly installments. This is generally done in consultation with the members. Now the business has started.

The first installment is for the promoter, and that is his seed capital. From the second month onwards the total sum will be auctioned among the members. Those who are in urgent requirement of money take part in the auction. The person who is willing to accept the least amount is given preference.

Suppose Total number of members is one hundred and the monthly installment is one hundred rupees, the total amount comes to ten thousand rupees. Member A bids for 9900 rupees B for 9500 rupees and C for just Rs.9000, the amount goes to C, but he will get only nine thousand rupees. The balance amount (one thousand rupees in this case), on which all members have equal right. That will be given as discount in the payment of next installment. In this example a member has to remit only ninety rupees instead of on hundred as his third installment.

All members are benefited, the benefit of the member C, is that he gets the money in the next month it self. He can tide over the financial problem with ease. Other members get a credit of hundred rupees by remitting just ninety rupees. As the business runs entirely on mutual trust, there is no documentation involved hence no fee attached! What a win win situation!

Of late some crooked elements got involved in to this business and polluted it to the extreme. Some promoters disappeared with members’ money, and in other cases some members disappeared after accepting the money. Total business came in to turmoil. And the Government had to interfere for settling the claims. It framed rigid rules to regulate the business of chitty funds. Some of the regulations imposed on the promoters were so harsh, that the business was stopped altogether. Some big players shifted their head quarters to other states to evade the state’s laws.

Thus a business that worked on mutual trust, has turned out to be one which runs on draconian laws and expensive documentations. Mean while Kerala state Government has started its own chitty business. The firm is known as ‘Kerala State Financial Enterprises Limited”

The story runs as the old one. Once upon a time two rats jointly found a piece of bread. When they were engaged in disputes regarding the ownership of the find, a cat interfered. He divided it in to two. One piece was larger. The judge had a big bite to balance the pieces. Then the other piece became larger another big bite was the only solution! What to say? The entire piece went in to the cat’s belly!

The Financial Enterprises is running successfully. The corporate style in which it is working is lacking some thing. The old bondage is not present in its functioning. Just runs as every business run. The person who won the bid has to execute bond with two Government employees as sureties. Many a Government employees played the roles of good Samaritans found themselves cheated, the defaulted amount of the member became the liability of the surety.

The poor employees had to cough up the entire amount along with penal interest, documentation charges and court expenses etc. from their salaries or retirement benefits. Now the very name of the “Financial enterprise” is enough to sent shock waves in to the hearts of the poor Government employees.

In the past the chitty promoter was every thing about the business. Clients were either his neighbors or his friends.

The business they were doing was not just business, but they were involved in helping each other.

Government has banned unlicensed chitty business. But it has not stopped altogether. In the villages and small towns the business runs as usual. Only difference is that the promoters are choosier about the clients they enroll. Disputes seldom arise as the members are all inside a circle. Even if anything pops up the community interfere to get it sorted out.

There are other wizards known as “the blade companies” “Kuri kallyanam program”etc. in the god’s own land. Which will be discussed later. Chitty,chitty bang, bang,.........!

Author: Sasi Kumar

Source: Naturemagics.com - website on Kerala Tourism

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