00:00Look at the applause, Ma'am got. It sees everything.
00:21I'm very honored to be here this morning to share the dais with all of you
00:26and also to represent what the industry is going through
00:31and what is it that we really need to grow in this industry.
00:37And Praveen Garu explained at length how Chitfan industry has been the backbone
00:42for several years to many big industrialists.
00:48But the truth is that it has led to the survival of the common man,
00:54the small and middle class people, the farmers and traders by and large.
01:03We all know that Chitfan is the oldest indigenous financial institution.
01:10They uniquely combine savings and borrowings
01:14and have become a lifeline of financial inclusion
01:18for millions who lack easy access to banks.
01:23Despite their significance,
01:25the industry faces regulatory and operational challenges
01:29that need urgent redressal.
01:33Chitfans are not just a financial tool,
01:36they are a community institution rooted in trust,
01:41serving rural households,
01:43small and medium entrepreneurs and urban residents alike.
01:48Our task today is to explore how we can safeguard this legacy
01:54while modernizing for the future.
01:57We have a section 16 in the Act.
02:06I am delving more with the Act
02:09since we have all the IS officers
02:11whom we can let them know what the difficulties are
02:17and how they can help us out.
02:18I believe, sir, the Act, which was a 1982 Act,
02:27predominantly was made to serve companies
02:32which just had, not even companies,
02:35maybe individuals who are running the Chit Fund companies,
02:38just having one Chit that they were operating.
02:41But today, number of proprietors have turned firms,
02:46limited companies,
02:48and many companies are conducting
02:49probably more than 20 groups, 50 groups, 100 groups.
02:54And we at Mark Darcy have more than close to 6,000 groups going on
02:59amidst all the four state operations that we do.
03:02Sir, it is time that we really look into the Act
03:07because our country, which is aspiring to become
03:13the third largest economy in the world,
03:16outbeating even, I mean, Japan,
03:19I think almost one day we crossed their GDP
03:22and probably every other day we are both competing there,
03:27but crossing even Germany
03:30and trying to be the third economy by 2030.
03:34And India being a puzzling nation
03:36of billions of digital transactions,
03:42why only Chit Fund industry is left behind, sir?
03:45So we kindly request you to look into it
03:49and help us out so that we can also be,
03:53as an industry, be given fair chance
03:55to survive in this digital world.
03:59So section 16 talks about in every auction,
04:03two subscribers being present.
04:06These days, nobody has time.
04:07They all want to operate electronically.
04:11So if this can be changed to digital participation,
04:16you know, where people can participate online auctions,
04:20it will help the subscribers
04:21and reduce the operational burden.
04:24In fact, in the last two, three auctions,
04:28nobody is there to participate at all.
04:31So how can we expect anybody to be present?
04:34So the act itself is violative for the last auction
04:41because last auction, there will be only one person.
04:43So how can two people be present in the auction?
04:46So when it comes to section 20, sir,
04:48it talks about 50% fixed deposit
04:53and 50% bank guarantee,
04:56which also becomes operationally inconvenient.
05:01We would prefer probably 50%, not 100%.
05:06The AP government, the AP state had 50% its security deposit
05:12until the Central Act was enacted.
05:16So if we can recall that
05:19and make it 50% fixed deposit
05:21and that too, instead of taking the,
05:25at the time of taking the price sanction,
05:29price sanction from the registrar,
05:31if it can be at the time of the commencement,
05:35then it will ease on the liquidity of the chit fund companies
05:38and they would be able to make faster payments to the subscribers, sir.
05:44And when we look at the section 20,
05:49subsection 5,
05:51it talks about where a chit is terminated
05:54and the registrar has satisfied himself
05:57that claims of all the subscribers
05:59have been fully satisfied.
06:01He shall order the release of the security
06:03furnished by the firman.
06:05The current issue is, sir,
06:06lack of clarity,
06:08delays, release of security
06:10when subscribers don't claim price amount.
06:13Very rarely,
06:14we conduct, like say,
06:16maybe 25 chits.
06:18There will be one subscriber
06:19who is not able to give the security.
06:22And sans the security,
06:23we cannot release the price amount.
06:25Such price amounts get transferred
06:27into number 2 account
06:28and it is there.
06:31And we only adjust that amount
06:32towards the arrears in that chit
06:34once in 6 months.
06:36And if there is any credit left
06:38after the chit is terminated,
06:40we make the payment to the subscriber.
06:42So this can be looked into by the registrars
06:46and release our fixed deposit amount
06:50once the chit is terminated.
06:52Because a subscriber who has not taken the price amount
06:56will not be giving us the no-claim letter.
06:58So there is no way we can produce a no-claim letter
07:01of an unpaid price subscriber.
07:04And we would like to follow the Act in total
07:07in order to be 100% compliant.
07:10So balance sheet,
07:12you know,
07:13the Companies Act itself gives 6 months.
07:15Whereas in the chit fund rules,
07:18it says balance sheet should be filed within 3 months.
07:23Which is so unfieldy to do
07:27because the bankers themselves
07:28with whom the fixed deposits are kept,
07:32you know,
07:32they don't give us the receipt information,
07:36the interest postings
07:37until it is June.
07:39So once we get the information,
07:42we have to verify all that
07:44and then there will be some wrong postings.
07:47We have to get that rectified.
07:48All of that has to get reflected
07:49in the balance sheet.
07:52So this year we really struggled
07:55to see if we can complete it in 3 months.
07:58Day and night our accounts team
08:00has worked in all the 4 states.
08:03But still,
08:03you know,
08:04it took 5 months.
08:05So we are able to comply with the Companies Act
08:08wherein 6 months time is given.
08:11So something needs to be done about this also, sir,
08:13so that it reduces compliance stress
08:16and harmonizes regulations.
08:18And largely the other bottlenecks
08:22are still being very much manually compliant
08:27with regard to documentation.
08:29A lot of manual filings are there
08:33which we would like to go forward
08:35with digital compliance
08:36which makes it easy.
08:40You know,
08:40even the registrar would know
08:42everything online.
08:44There will be dashboards
08:46which can be seen by the registrars.
08:49Everything will be much more transparent
08:50is what I believe in.
08:52And Mark Dersi Chit Fund
08:53is totally moving towards
08:56digital operations.
08:58Another bottleneck
09:00is the delayed security deposits
09:02release of them.
09:04Sometimes,
09:05even after 3 months,
09:066 months,
09:07they are not released
09:08which tightens the financial situation
09:11of a Chit Fund Operator.
09:13And prolonged legal disputes
09:15which hampers the efficiency.
09:18One of the reasons
09:19why probably
09:20very rarely
09:21not organized Chit Funds,
09:24of course,
09:26this can happen
09:26only to organized Chit Funds,
09:28very, very rare
09:30because the percentage
09:30is almost nil.
09:32But it can go wrong
09:33because of
09:34not able to recover
09:35rather than
09:37doing business.
09:38If anybody fails,
09:39it is because of
09:40failure to recover
09:42the dues
09:42from the
09:43defaulted subscribers.
09:46So,
09:46the most important thing
09:48is, sir,
09:48about the
09:49GST rationalization.
09:52Why are Chit Funds
09:54being charged
09:5418%
09:55when banks,
09:58you know,
09:58NBFCs
09:59are not charged
10:01anything
10:01on the interest
10:02earned by them?
10:03For us,
10:04the income
10:05is the commission
10:05and for
10:07banks and
10:08NBFCs
10:08it's the interest.
10:09There's no
10:10GST charged
10:11for that.
10:12But whereas
10:12we are being
10:13charged 18%
10:14which is,
10:16you know,
10:17looking at us
10:17like apples
10:19and oranges,
10:20differentiating us
10:21like apples
10:21and oranges.
10:22So,
10:23kindly,
10:23sir,
10:24we seek
10:24your intervention,
10:26we seek
10:26your help
10:27in rationalizing
10:28this and
10:29making it
10:31impartial,
10:32sir.
10:32And also
10:34people like
10:35Mark Darcy,
10:36firms like
10:37Mark Darcy
10:37where we are
10:38operating in
10:39different states,
10:40we have
10:40different rules
10:41every state,
10:42different fee
10:43structure,
10:44different practices
10:45which create
10:46inefficiencies
10:47and procedural
10:48hurdles.
10:50So,
10:50to develop
10:51a model
10:51chip fund
10:52rules
10:52for nationwide
10:53adoption
10:54to bring in
10:55consistency
10:56would be the
10:56best.
10:57These challenges
10:58affect not just
10:59businesses
11:00but the very
11:00trust of subscribers
11:02who look to
11:03chip funds
11:03as their
11:04safety net.
11:05Digital
11:06transformation,
11:08the requirement
11:09of physical
11:10submissions
11:10for regulatory
11:12approvals,
11:13I am just
11:13insisting upon
11:14that,
11:15slows down
11:15group
11:16commencements,
11:17reduces ease
11:18of doing
11:18businesses,
11:20introduce
11:20secure e-filing
11:22for chip
11:23agreements,
11:24minutes,
11:25returns and
11:26fees along
11:27with online
11:27payment facilities
11:28to reduce
11:29cycle time,
11:30improve compliance
11:32and enhance
11:33transparencies.
11:34Promote online
11:35auctions and
11:36digital collections
11:37for convenience
11:38and trust.
11:40I have covered
11:41about the
11:41judicial disputes
11:43and skipped
11:44that.
11:46Just one thing
11:47is,
11:48when defaulted
11:49subscribers
11:49are going
11:50for appeals,
11:52please insist
11:53upon at least
11:5425% remittance
11:56so that
11:57frivolous
11:58litigation
11:58can be avoided.
12:01I lost it
12:01on my iPad
12:02so I am just
12:03looking up here.
12:04And also we
12:05need to curb
12:06unethical competition
12:08so proliferation
12:09of unregistered
12:10chip operators
12:11undermines
12:12trust,
12:13exposes subscribers
12:14to the risk
12:15of losing
12:16their savings
12:17and damages,
12:18confidence in
12:19the entire
12:20regulated industry.
12:21So curbing
12:22unregistered operators
12:24is very,
12:25very important.
12:26strict enforcement
12:27penalties when
12:29people are found
12:30to be operating
12:31unregistered chips
12:32and ringing
12:33about public
12:34awareness campaigns
12:35to protect
12:36subscribers
12:36from fly-by-night
12:38operators.
12:39So we have
12:40huge opportunities
12:41ahead.
12:42Beyond addressing
12:43challenges,
12:44the sector is
12:45poised for growth
12:46if supported
12:47by enabling
12:48policies.
12:50Financial inclusion
12:51reach undeserved
12:53segments with
12:54simple community-based
12:56chip groups
12:57which can be
12:58operated in
12:59rural areas
13:00and inculcate
13:01a saving culture.
13:03Promote
13:04chip funds
13:04as a disciplined
13:05savings tool
13:06for the younger
13:07generation.
13:09As I conclude,
13:10sir,
13:10chip funds are
13:11at a crossroads.
13:13Over-regulation
13:14and unfair
13:14competition
13:15currently impede
13:17growth,
13:18and targeted
13:18reforms and
13:19modernization
13:20can unlock
13:21the sector's
13:22full potential.
13:24By embracing
13:25digital transformation,
13:27ensuring regulatory
13:28balance,
13:30and curbing
13:30unregistered
13:32operators,
13:33chip funds
13:33can emerge
13:34stronger than
13:35ever.
13:36Thank you so
13:37much.
