Chit fund operators, subscribers in a fix over collections, payments

‘Since lockdown, we could not receive over 50% of our monthly chit instalments from subscribers’

A crucial question haunting most chit fund operators in the State is how to make payments of February month’s prize amounts to their subscribers.

Since the lockdown was announced on March 22, activities in every sector, barring supply of essential services, were affected directly or indirectly. Operations of registered chit fund companies, which have close to ₹1,600 crore turnover every month on an average in the State are no exception.

Chit fund companies conduct auction of chits on different dates from 22nd of a month and complete it by month-end.

Rules mandate that a chit fund operator must pay the prize money to the subscriber within 45 days of auction. As lockdown in the State was announced on the night of March 22, which was observed as Janata Curfew following the Prime Minister’s call, most of the chit fund operators were in a state of confusion initially.

Auction dates

As the lockdown was initially till March 31, companies had to alter the dates of auctioning chits. Meanwhile, the government declared that chit fund operators can conduct auctions as per their convenience from March 22 till month-end and even till first week of April.

The first hurdle was crossed by facilitating deferment of auctions. But the real difficulty lay in chit fund operators paying prize amounts to subscribers. If there are 25 members in a chit group, less than half of them pay the monthly instalment in first week of the month.

“A majority of them pay the monthly instalment after third week to month end. With lockdown from March 22, we could not receive more than 50% of our monthly chit instalments from the subscribers,” a chit fund operator said.

They were hoping to receive money in the first week if the lockdown was lifted.

Their hopes were shattered as extension of lockdown till April-end was announced on Saturday. “Our boys cannot go out for collections. Even subscribers cannot come to our offices. There is just no flow of money,” says another chit fund company owner.

Some salaried employees are transferring money online. “But those running eateries, selling goods, commission agents and technicians are saying they are helpless and are seeking deferment of monthly instalment payments,” the chit fund company owners say.

More worried are the subscribers who were supposed to get the prize money in the auctions held in February.

Though their prize amount had to be deposited by the chit fund companies by the end of first week in May, they are tense over whether they would get the prize money in this situation.