Date Of Publication:4-5-13
The Tamil Nadu Chit Fund Companies Association (TNCFCA) today appealed to the people not to confuse ‘Ponzi Schemes’, that offer unfeasible interest rates, cash prizes or gift articles for deposits, with Chit Funds which were traditional and highly regulated miscellaneous Non-Banking Financial Companies.
Registered chit funds could not accept deposits nor offer any other financial products or services, the TNCFCA said, adding, the companies that organize chits should have ‘chits’ in its name. “There are over 2,000 registered Chit Fund companies with annual turnover in the range of Rs 4000 Crores in Tamil Nadu.
However, the misconception that equates deposit schemes with chit funds is lowering subscriber’s confidence”, All India Association of Chit Funds General Secretary T S Sivaramakrishnan told reporters here. There were about 10,000 registered Chit Funds across India with an annual turnover in the range of Rs 30,000 crores. In Kerala, a chit fund was run by the State Government itself.
Mr.Sivaramakrishnan said in the wake of volatile market conditions, chit fund proves to be the best saving/borrowing option that offers standard returns, low-cost loans, and personalized service. Chit funds are community-driven and regulated both by the Central and State Governments.
As chit funds offer personalized, hassle-free service, among others, the industry is growing at a rate of 15-20 per cent a year”, he added. He said in the wake of recent scams involving deposit schemes getting misreported as chit fund scams, it has been becoming increasingly difficult for the industry to convince people to join chits.
TNCFCA President Y S Mathivanan said the chit funds sector has produced many large companies and small AND medium enterprises in Tamil Nadu, thus contributing to the growth of the industry, entrepreneurship and employment generation.