7-12-2012Dr. Raghuram Rajan,
Chief Economic advisor,
Government of India,
We congratulate you on taking over as the Chief Economic Advisor, Government of India.
To introduce our self, ours is Sole All India forum representing more than 30000 chit operators in whole of India through their District State Associations having a turnover of nearly 30,000 crores per annum, but do not represent the unregistered sector, which is almost 100 times the size of our industry.
Though financial inclusion is a recent buzz word, traditional financial technology like ours had already been doing this from time immemorial even before the origin of banking concept. The fact that M/s Bill & Melinda Gates Foundation are supporting our activity under their ‘Poverty Alleviation Program’ speaks volumes in this regard. The initial research report of an ongoing survey conducted by IFMR, Chennai under the guidance Dr. Antoinette Schoar, MIT Sloan School of Management & Dr. Mudit Kapoor, Indian School of Business, Hyderabad, substantiates the same. (Copy of this Report for your reference is Annexure I). This is on account of the fact that Chit Fund is a unique product having several advantages like, a. Savings cum Borrowing instrument, b. Cost of borrowing is the lowest, c. The cost is determined by the participants themselves, d. It doesn’t require any subsidy from any external source as in Micro-Finance and other intermediaries.
We are very much confident of participating in the National Financial Inclusion Program in a massive way; however, we are getting suffocated as we are not at all included anywhere in the ongoing economic reforms agenda. Though the Department of Financial Services, Ministry of Finance has constituted a Key Advisory Group to bring in value addition in our working, the recommendations of the said group is yet to see the light of the day. Though a Memorandum has been submitted to Dr. Arvind Mayaram on 28th September 2012, as directed by the Hon’ble Minister of Finance, as is our experience with any Government department, we are yet to know the outcome.
As our industry will not be able to move forward even a inch without any Administrative or legislative support, we will be greatly honoured if you can spare us some time to let us know your perception on the role of informal financial institutions like Chit Funds and the value additions that we have to bring to our working to complement banking and other financial intermediaries, with specific reference to financial services being offered to the urban and rural poor.
Meanwhile, you may make it convenient to put in a word to Department of Financial Services, and the Department of Economic Affairs to consider our representation to some logical end.
With you in the service of our Nation and thanking you