The purpose of all earnings is to build wealth and manage the necessary responsibilities. All the money you make at your 9-to-5 job is either spent for today’s pleasure or saved for a rainy day later in life. Savings can help you meet up for the future since they offer a safe and secure means to allow your earnings to grow into an important asset.
Getting to know all about savings can help you make the right financial strategy. We save for purchases and emergencies. Saving money typically means it is available when we need it and it has a low risk of losing value. It is important to track your savings and value your goals.
It is a savings cum borrowings scheme, wherein a set of people (known as members or subscribers) come together and invest a fixed amount every month for a fixed period and the total amount contributed by subscribers shall be auctioned and given as prize money to subscriber every month till the tenure of that particular chit.
Many years ago a small group of farmers started a unique scheme in the southern part of India. Every farmer gave a fixed quantity of grains periodically to a chosen trustee.
Chit funds have now been globally operated as a rotating savings and credit association (ROSCA) and the system has won universal acclaim which is an Indian concept.
– For example, if the monthly instalment is 1000 and there are 20 members, the pot in the first month will contain 20,000. If the auction determines a winner who is willing to accept 16,000 for that month, the (foreman commission 5% from the chit) 1,000 is deducted and the dividend 3,000 is distributed to other members.
– The subscriber who won the auction will enjoy 16,000 in the first auction and the others benefited in their share of the 3,000 as a dividend.
To make borrowing and saving simple and easy for everyone especially the lower stratum of the society. They do not engage with any financial institution due to lack of financial knowledge and intimidation.
Chit fund is serving to the augmented credit needs of the country’s population and it also educates a strong commitment to save each month.
As cash is highly liquid in chit fund it is an easy tool to make money in emergencies.
For e.g.: Let’s assume a person before lockdown (February) who starts depositing 5000 in an RD account for 5 months meanwhile government imposes lockdown throughout the country.
Now (July) he is facing a medical emergency and he could only withdraw a maximum amount of Rs. 20,000 or about 70% of the deposited amount from the bank.
But if the same person subscribed in a chit fund of an amount of Rs. 1 lakh and pay only Rs. 25000, he would have the ability to access the entire amount of Rs. 1 lakh.
Let’s see how chit fund helps roadside vendors!!
Street vendors live a perilous life. They bear the weight of a plethora of laws. But till recently, no law actually protected their right to a livelihood. Municipal corporations used to auction the right to collect tax from a street vendor and make him pay for the right to vend.
The major drawback is that they are not been financially educated about their earnings.
Many reputed banks in India change their norms on their savings account limitations like average monthly balance, if not they also charge for the non-maintenance of AMB.
How could a street vendor maintain a savings account where the AMB is more than the savings?
This threatens the majority of the street vendors as the banking system gives a strange view. There are also many banks which give 0 balance savings account, but the interest rate is low.
This gave a huge room for chit funds to serve and deliver financial solutions for the street vendors to build a better economic brick.
“No risk” savings option (chit fund) with digitalization seems to be an excellent tool to promote financial inclusion in future if channelized in the right format.
Customers have always been important in the design of our processes. Kopuram chits is inculcating the habit of end to end customer journey through “DIGITAL” in all forms of our business functions.
Subscribe with Kopuram and get accessed to your money for all unprecedented and foreseeable events in life.
– Easy to join as there are no tedious formalities needed.
– Both borrowing and saving mechanism
– High returns compared to savings account
– Free from market fluctuations
– No credit history
– No rigid formalities
We happy to assist you!
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