Chit Funds is a 1000 years old financial instrument intimately connected with millions of people in developing countries. Chit Funds is in practice in India, Central African countries, China, Pakistan and other south-east asian countries. Chit Funds is popular among the low-income group, self-employed and salaries class. A study by the institute for financial management and research (IFMR) has found chit funds prove to be successful providing an innovative access to finance for low income households. Study was conducted in India.
The chit fund also known as chitty, or kuri in India and ROSCA (Rotating Savings and Credit Association) internationally, occupy a unique position in the financial system of India. This indigenous financial institution prevalent even before the evolution of banking, had its origin in Southern of India, when the transactions were in the Barter System.
From a humble beginning to its present gigantic growth, the chit fund Institution has now attained the status of a quasi-banking system, and has turned out to be a boon to the aggressively growing economy of the nation. According to a report of Asian Development Bank , the turn over of some 1066 chit fund companies, as far back as 1986 was, an astounding Rs.81.6 billions. The estimated turnover of Registered Chit companies all over India as of now is exceeding Rs 35,000 crores per annum. Under the aegis of M/s Bill & Melinda Gates Foundation, we are on the process of reaching the Lower and Middle income household, in the Micro Finance model. Institute of Financial Management and Research, Chennai , who were engaged for the first ever study of this Industry on an all India basis is now on the process of launching different Pilot Projects in this regard.