New chit fund to run on blockchain tech

Hyderabad: Even though chits is primarily an unregulated territory and is at the helm of people who do not register themselves, Telangana government is trying to address the issue of bringing back the trust in this system by using blockchain technology.

In a first of its kind initiative, T-Chits a pilot project created using latest blockchain technology is being brought into Chit Fund Administration. The product is built by start-up Chitmonks alumni of Telangana’s start-up initiative T-Hub.

Administration of chit funds through companies includes lot of paper work and is happening is manually and there is no transparency for subscribes.

Every time a company wants to start a chit, they have to submit a huge pile of documentation and on monthly basis to registration and stamps department which is the regulator. Consequently, there is no transparency for subscribers and auditing needs to be done to match the documentation with government and Chit Fund company. With blockchain technology, each record is unique and cannot be tampered.

“Everything put into the blockchain system is completely immutable. Blockchain will not let you make changes to the data which is submitted into the system which is approved by Telangana government. If a regulator is approving any application of any registrar that goes and sits into system and this data cannot be tampered. For Chit subscribers, T-Chits is going to be a big deal because if you are doing chit with any chitfund company, you can have complete faith in the how the Chit group is formed, when is it formed and the whole history of the group with the government and subscriber at click of button”, said Pavan Adipuram founder of Chitmonks

However, most of the activity through Chits is happening in offline mode within their groups without knocking the doors of the chit fund companies.

“Registered Chit fund is safe and through this process, more and more people will prefer to go to a regulated authority. Block chain is about trust and if we can bring about this system of trust, more people will be on boarded and this unregulated territory can be regulated”, said Mr Adipuram

As part of the pilot projects two registrations and stamps department in Hyderabad have been on boarded, which will eventually be expanded to 14 branches across the state.

“Around 5 companies are on board and for next 2-3months based on reactions, product will be formalised and then will be thrown open to public”, Mr Adipuram said. IT secretary Jayesh Ranjan will be launching the T-Chits initiative formally on Wednesday at T-Hub.