About KCA

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. Study was funded by Bill & Melinda Gates Foundation.

The findings were recently submitted to the Indian Finance Minister Pranab Mukherjee.

Based on the data available for 2006, the study showed that Andhra Pradesh topped the five States with 1.4 million household participation in chit funds ( 7% of the total households) and 1.6 Billion US Dollars circulated through chit schemes. Tamil Nadu another state had 800,000 households participation (five per cent of the total) with 820 million US Dollars in circulation.

The research showed that on an average 50% of the chit fund members are below poverty line (household consumption less than 1.5 US dollars a day). Self employed and salaried employees formed a major part (78.9%) of the membership of chit fund schemes.

The interest charged per annum ranged from 8% to 28%, though higher than bank loans, was lower compared to 24 to 36% charged by other private financiers. Plus, the chit funds provided better returns on the investment than other options available to members.

It said people find the chits more advantageous as they require less collateral and documentation. The chit amount is collected from the participants at their doorstep on a flexible when the participants are able to pay. The businessmen also find it more useful for easy money rotation than bank loans.

In India alone chit funds’ turnover is estimated to be 4 Billion USD. In Africa 20% of house hold savings is accumulated through Chit Funds.

History of Association

Karnataka Chitsters' Association was started by Sri. Basappa Shetty along with Sri. Gangadharaiah in the year 1978. The name of the association at the time of formation was “Karnataka Chit Promoters & Financier’s Welfare Association”, & the office was in Jumma Masjid Road, Bangalore

Past Achievements

The following are the achievements of the Karnataka Chitsters Association:

  • We have conducted around 5 seminars / workshops for the benefit of the Chitsters & for the public.
  • When notices were issued by the Income Tax Department (survey) for giving the details of all the Chit Subscribers investing more than Rs 2,500/- per month, the Association met the Income Tax Commissioner & got it amended to Rs 5,000/- per month which was a great relief to the Chit Industry.
  • In the year 2001 the Finance Ministry imposed service Tax on chit funds & our Association was able to solve the issue & got relieved from service Tax.

However, it was re-imposed in the year 2007 - 08 & our Association along with Chit Fund Karnataka is fighting for non imposition of Service Tax & as of now the matter is in the Supreme court. The Department has given an abatement of 30 % on service Tax after giving lot of representations.

When the RBI categorized our Chit Fund industry as NBFC & seeked for Amendment of the minimum capital to be as Rs 25 Lac (Now 2 Crores). Our Association along with Karnataka chitsters Association fought & was successful in removing such condition by catagorising our Chit Industry as Residuary Miscellaneous Non Banking Finance Companies, from Miscellaneous Non Banking Finance Companies.

When the Chit fee for Prior Sanction was increased from Rs 100/- per group to 1% of Chit value in our state, our Association filed a Writ Petition in the High Court of Karnataka & obtained a great relief in reducing the the fee to obtain Prior Sanction for each group.

Vision & Mission

  • Confederate the functioning of all Chit Fund Companies in Karnataka
  • Periodical market sturies to be made and target of business efficiency be continuously up graded
  • Provide professional training to the members of the association
  • Promote ethical values in its working, for the overall benefit of the subscribing Public
  • Propagate and uplift the development of Chit Fund Industry in the state
  • Bring in value addition to chit fund functionalities
  • Take measures to protect investors interest
  • Formulation and implementation of various legislations at Central & State level
  • Awareness of chit fund companies role in National Economy
  • Get all the unregistered chit fund companies to become members of association

Aims and Objectives


" To create sense of brotherhood, mutual harmony, love and affection among the members of the Society and to help in solving the internal disputes/ matters of the members of the Society "

  • The All India Association of Chit Funds an Apex body at the national level, committed to:
  • Confederate the functioning of all State and District Chit Associations in India, promote ethical values in its working, for the overall benefit of the subscribing Public; propagate and uplift the image of chit fund Industry, bring in value addition in its working and position this Traditional Financial Technology against other financial intermediaries in the Financial Inclusion program, without compromising on the Investor protection measures.
  • The Association, in existence for the last 3 decades had been interacting with various government agencies playing a major role in the formulation and implementation of various legislations at Central and State level. As the Chit Industry is yet to breath the fresh air of the on going liberalization programme, we have the huge responsibility of bring in awareness on our role in the National Economy among the Legislatures, Administrators and the Subscribing Public. As it is not the mere formulation of legislation but the effective implementation that matter, the need of the hour is have a user-friendly legislations, in tune with the on going Government policies Though the total number of members in the Association through the State and District Associations are exceeding 30,000 in number, the immediate challenge before the Association is to cover the unregistered segment expected to be at least 100 times of the registered ones to the mainstream in the overall interest of every one.