Kerala government to start registration for its ambitious NRI chit scheme

Kerala government is planning to start accepting investments for the proposed Pravasi Chit scheme, a chit fund scheme for Non-Resident Indian (NRI) Malayalee diaspora, by the beginning of August this year. The ambitious project is likely to raise around Rs 100 billion for infrastructure projects in the state.

The state government will start registrations for the project from Monday. Some of the other states like Andhra Pradesh and Karnataka have also evinced interest to replicate the model, according to reports. 

The chit fund will be operated by Kerala State Financial Enterprise Ltd (KSFE) and the money would be deposited in Kerala Infrastructure Investment Fund Board (KIIFB) bonds, a vehicle which has been revived three years back to invest into infrastructure development projects in the State.

State Finance Minister T M Thomas Isaac invited Malayalee NRI to join the scheme. He said even though the state has various achievements in terms of social and welfare programmes, and the need of the hour is infrastructure development to meet the requirements of the growing aspirations of the new generation. Executing projects through KIIFB would fast-track the development and the state government has made provisions to bring money from cess and other taxes to ensure funds in the Board.

"KSFE has a turnover of Rs 200 billion and around Rs 50 billion remains as treasury deposit at any point in time as free flow of KSFE. By attracting investment from NRI Malayalee, we are we are expecting to have a free flow of Rs 100 billion in another 4-5 years and this can be deposited in KIIFB fund for development of the State," said Isaac. 

The state is planning to spend around Rs 500 billion in various development projects, including a Rs 80 billion spice route connecting all the harbours in Kerala from South to North. KIIFB is expected to get around Rs 1 trillion from tax collection over 14 years, which could be used for infrastructure development.

At present, there are no chit schemes for NRIs in the state and the first such scheme would be launched now and accept deposits between Rs 2,500 and Rs 40,000 per month. It offers insurance coverage and pension schemes, which is a first for the diaspora. In case of failure in the remittance of chitty instalments due to accident, death or permanent disability, KSFE will take care of the remaining payment through an insurance coverage facility. 

The initial chit will be exclusively for NRIs in UAE who belong to the age group of 18-55 years. There is also a provision for the subscriber to link the chit scheme with pension fund/scheme, according to KSFE.

The Chief Minister is expected to inaugurate the online registration for the scheme.

Registering from the scheme would just mean that the customer is interested in the scheme and does not mandate him/her to invest in it. One in every 5,000 who register for the scheme would be rewarded.

"You don't have to do any sacrifice for the development of the state. As mentioned earlier, you just have to join Chitty, which is financially beneficial to you. We will take care of rest of the things," said the chief minister in his social media page. He added that the scheme is expected to be launched in July 2018. According to reports, the States like Andhra Pradesh and Telangana have evinced interest to start similar schemes for the NRIs. 

The state government has announced the scheme in the Budget proposal for 2017-18, in collaboration with the KSFE as a means to raise funds for the infrastructure development in the State under ). The state government has also organised meetings across the assembly constituencies in the State to communicate with the relatives of NRKs, in order to gather interest from the NRKs to the scheme. 

It has also received approval from the Reserve Bank of India (RBI) to make NRIs members of the Chit scheme. The large-scale migration of Malayalees, mostly to the Gulf region, has played a major role in Kerala’s economy, say KSFE officials. 

A Kerala government survey showed that remittances sent by the diaspora support at least 5 million people in the state, which has a population of 31.5 million. The aim is to collect Rs 100 billion out of a total of Rs 500 billion for various developmental activities for the next five years of the state are expected to be raised through NRI chitties. KSFE Pravasi  Chitty is specifically designed for Keralites working or settled abroad, says KSFE.

It will enable online banking facilities along with a specially designed mobile app so that anybody from anywhere in the world can take part in the scheme activities easily. Procedures such as membership, payment of monthly subscription and participating in auctions are designed to be executed online.