Around Rs 11,088 crore was being circulated through chit fund schemes in the three southern states of Tamil Nadu, Andhra Pradesh and Kerala, a study released by the Institute for Financial Management and Research (IFMR) said. The study was funded by the Bill and Melinda Gates Foundation.
Speaking to reporters here, Preeti Rao and Sharon Buteau of the Small Enterprise Finance Centre at the IFMR, said southern states were matured and organised when it came to the chit fund industry, compared with other states. The two researchers have been studying the industry in Tamil Nadu, Andhra Pradesh, Delhi, Kerala and Karnataka for the last three years.
Till 2006, around Rs 3,700 crore was floating in Tamil Nadu via chit fund schemes, Rs 7,200 crore in Andhra Pradesh and Rs 188 crore in Kerala. Around 58 million households were part of the schemes.
While the number of schemes registered was going down, the value of these schemes were going up, which might imply that chit funds were moving towards high values schemes from the low value, they said.
A major reason why people preferred chits funds to banks was it gave better returns on savings and loan interest rates.
The researchers met around 1,657 members in 91 districts and studied 1,543 schemes till 2006.
