We, at KSFE Attingal Evening branch, do not have any fancy claims (like mutual funds, insurance companies, and other wealth management firms do). We believe you are too intelligent to be fooled by such claims. What we offer is a simple investment scheme that can be used either as a loan or as a savings scheme. Sounds interesting? Read on.
Chitty is a traditional and indigenous financial instrument in Kerala. It is also known as kuri and has many formats (click here for a scholarly review of the chitty and kuri systems in Kerala). To put simply, a chitty scheme collects money from a set of people each month, and provides a lump sum to the neediest person of the group.
(The following illustration is given for the benefit of those who are new to chitties. Please skip the next two paragraphs if you understand the working of chitties.)
Consider this example. Suppose 40 people have joined in a chitty for a monthly installment of Rs.2500/-. The total amount collected is Rs. 100,000/-. The chitty lasts for 40 months and one person gets the prize money each month. In the first month, suppose the person who wins the chitty (usually through a draw of lots) gets Rs. 70000/, that is a discount of Rs.30000/- (i.e., 30% of the total amount). From this Rs.30000/-, Rs.5000/- is taken as commission and Rs.25000/- is distributed equally among the members. In this case, it comes to Rs.625/- (=25000/40). So, the next month each member has to pay only Rs.1875/- (=2500 – 625).
This does not mean that a member has to pay only Rs.1875/- per month for the whole 40 months. At a later stage, say after 20 months, suppose the person who wins the chitty gets Rs.85000/- (usually through bidding; draw of lots is conducted only when at least two people are willing to opt for a discount of 30%). The discount in this case is Rs.15000/-, from which Rs.5000 is taken as commission and Rs.10000/- is equally distributed among members. In this case, it comes to Rs.250/- (yes, 10000/40). Each member has to pay Rs.2250/- (=2500 – 250). Hope it is clear. This is an example, and the scenarios vary for different patterns.
An even better illustration can be found here.
Now something to relieve the tedium of algebra. One of our customers recently made an interesting observation. If you put Rs.2500/- in a mutual fund, they will put about Rs. 1875/- in your account [please note that the amount is not correct in the present situation. He made this remark some time back, that too about a ULIP scheme]. On the other hand, if you give Rs.1875/- to KSFE, they will put Rs.2500/- in your account!
That's all fine; but how can one treat chitty as a loan?
Simple. By opting for a 30% discount and winning the chitty as early as possible. You get 70% of the total chitty amount within a few months of joining. If you calculate the total amount you have to pay at the end of chitty, it will be far less than a loan of the same amount plus its interest after full repayment.
What about chitty as a savings scheme?
For this, you have to bid relatively late. That does not mean that you have to wait until the last installment. You need to arrive at an amount that is profitable and bid for that amount. In the above example, suppose a person calculated Rs.90000/- as the optimum amount. Let us say, he or she got the prize money after 25 months and put it as an FD. The total amount the member will get at the end of the chitty will be far higher than the total amount he or she has to pay.
Hope it is clear. For any queries and clarifications, please leave a comment here or send an email to firstname.lastname@example.org or email@example.com.
There are a number of chitty companies in Kerala. Why should one opt for KSFE? A clinching reason is the trust. The investment in KSFE is protected by Government of Kerala. The company has been functioning for nearly four decades now. No other chit company in Kerala can match us in terms of trust. Your money is in safe hands. Please do not take it as arrogance; but we won't catch cold even if the US economy sneezes. If you carry out a risk–reward analysis of investment, you can see that KSFE chitties provide an optimum balance.
The second reason is our social commitment. A major chunk of our profit goes to Government of Kerala, who utilizes it for carrying out development work, running public service organizations, and providing care for the less fortunate and privileged among us. The money you invest does not go to foreign countries, who use it for god-only-knows-what. Your money is used for the benefit of the people of Kerala. KSFE chitties help you to help yourselves as well as to help your fellow beings.
Why Attingal Evening Branch?
This one is the toughest and trickiest question. Let us state that there are no special privileges for Attingal Evening branch. Rules and regulations are same for all branches of KSFE. However, ours is a young branch and less crowded. It is the only evening branch in Chirayinkeezhu taluk. We function from 1 PM to 7 PM.
We know that this argument is not good enough to convince you about the benefits of Attingal Evening branch. But sometimes words do fail, particularly if the authors do not want to trumpet their own virtues much. Perhaps, you might understand the benefits when you see it by yourself. Please feel free to visit us. Our branch is conveniently located adjacent to Attingal private bus stand. lf you cannot make the trip, send an email to firstname.lastname@example.org, or call (0)9446002081.
Thanks for reading patiently. Please feel free to comment.