Housewives promote unregistered chit funds
People enroll for them despite several scandals.
Hyderabad: The business of non-registered chit funds running into lakhs of rupees per month has turned housewives into small-time promoters. From auction to commission chits, the minimum per cent earned by the housewife running a chit fund is five per cent; this means for a Rs 1 lakh chit, the agent gets Rs 5,000 (without any investment) as commission.
The chits are run by homemakers and the clients include family, friends or residents within the locality. Chits do brisk business in almost every colony or gated community because people look upon it as a saving avenue. However, the agents benefit out of it through commission.
The commission earned serves as a small saving or income to meet the little extras for children or domestic needs and desires. Housewives are known to run multiple chit funds of different amounts and earning well out of it.
Despite scores of scandals and bad publicity, chit funds continue to be well accepted by society and there is rising interest in them. Shamla Devi (name changed), a chit fund promoter of a non-registered company, said, “There is a misconception among the public about chit funds. It is a financial instrument for those who participate and over 90 per cent of them consider it as a form of savings. I run a '1 lakh chit for a period of 30 months and the monthly investment gradually increases as the months go by. The participants know of the commission I take, which is considered a service charge. Also I take the responsibility of getting investors and funds. In a way, I am acting like a mini bank providing security to those investing.”
Another chit promoter is Radhika Prasad Goud. She says, “Chit funds yield better returns on savings and on borrowings, the funds are available at better interest rates compared to other financial options like money on interest or pawning of precious ornaments.”
Though chit funds have to be registered, many are not. Radhika tells us why. “A non registered chit fund doesn’t require any paper work (identification) and government securities, which reduces the burden on the participants, unlike registered chits. These easy steps to invest attract many to invest.”
Homemakers turned agents say the commission they earn either goes into domestic purchases or to pay household bills or as saving. “It helps me pay my children's tuition fee and for dance classes,” said an agent.
Many housewives also rotate the money to earn interest. The money earned as commission is given on two or three per cent interest. This same interest money is then again invested to start a new chit fund.