History of Chit
The concept of chit fund has been around for over 10 centuries now. Hugely popular in developing countries, such as India, China, Pakistan and Central Africa, chit fund is one of the best sources of saving money for low income groups, salaried people and the self-employed. In the book written by Edith Jemima Simcox, there is reference to the Malabar Kuri system that existed from ancient Dravidian times and is somewhat similar to the systems in China. In China it developed to what is popularly known today as the Chinese lottery.
Erstwhile ruler of Cochin State, Raja Rama Varma gave loans to Syrian Christian traders and retains a certain portion of the loan for administrative and other expenses. Later, to manage the increasing numbers of loan seekers, he ordered a cast of lots and gave the accumulated amount to those who drew the lot on the principle of equity. Gradually the practice spread to other parts of the country and even abroad, includes Myanmar and Sri Lanka. But real streamlining of operations was somewhere between 1830 and 1835, when the Chaldean Syrian church started Kuries under its name and issued passbooks to subscribers as evidence of enrolment. Another interesting version of the origin of chits is linked with Portuguese missionaries from China, who visited Muziris (Kodungalloor) off and on for evangelization and established a seminary at Vypeencotta village in 1577. [ Muziris (now known as Pattanam near Cochin) was the important entry port. They reportedly encouraged promotion of chits in Kodungalloor. The practice of holding chits was also in vogue in China in the 14th century, to meet the financial needs of the poor and downtrodden.
Commercialization of Chitty.
A study conducted by the Institute for Financial Management and Research (IFMR) in India concluded that over thousands of crores of rupees are circulated through chit fund. Andhra Pradesh topped with 1.4 million households participating in chit funds circulating $1.6 billion. Tamil Nadu stood second with participation by 800,000 households circulating $820 million.Although the Indian banking sector has made enormous leaps in terms of offering several lucrative and innovative financial products and services to a large section of the population, chit funds remain the most popular option among the low and middle-class sections. Also, chit funds require less documentation and are quite hassle-free. Besides, the chit amount is also collected from the subscriber's doorstep. The estimated turnover of chit funds in India is $4 billion.
Ari Kuri or Nellu Kuri
In South India, Ari Kuri or Nellu Kuri (or Rice Chits) was there, where rice was exchanged instead of money. In villages, group of people used to collect rice in small measures and make the heap. Every member contributes a certain quantity of rice during every harvest season (that is, twice or thrice per year). The contributories gather together to take a lot and one person (supposedly selected by draw of lots; but in practice determined by the nature of the need of the person) gets the whole contribution minus the "commission" for the person who conducts the chitty. In South Kerala this was known as Chit and in North Kerala this was known as Kuri.
People followed Ari Kuri or Nellu Kuri system to raise money for their daughters marriage or for other specific occasions. Subsequently, instead of rice, cash was pooled together and lot was taken at periodic intervals. At present, there are monthly kuries, by-monthly kuries, half-yearly kuries etc.
In Thrissur area there are kuries known as Pooval Kuries. Pooval denotes crop period of paddy. In this case, there will be three installments in a year.
The Kuri Kalyanam practiced in olden times across Kerala shows the economical role played by kuries in our society. A Kuri kalyanam is an invitation to a feast to which the guest is expected to bring a cash gift. It is also called payattu? in some parts of Malabar. It is either held in a tea shop, hotel or the portico of the house of the receiver. When the host in his turn is invited to a feast by one of the guests he is expected to return double the amount, or less if he is perceived to be poor. Thari kanji is served and usually some music blares out from loud speakers meant to announce the event held under a pandal. The compulsion of repayment was always moral, not legally enforced. In modern times, anybody could attend the feast and pay as he could or wished for the food eaten. The Kuri kalyanam was thus a fund raising festival, involving a number of members of the local community.
Apart from marriage, kurikkalyanam was also conducted by the common man for other purposes such as building/repairing a house, starting a small business, sending a boy to Gulf countries for a job etc. Because of the rising cost of living more and more people were conducting kurikkalyanam for other financial purposes. As a result, one had to attend 10 to 12 kurikkalyanams at a time and naturally he found it difficult to contribute at these and thus tried to escape from them. However, kurikkalyanam was a blessing to the common man those days, but later had turned out to be a headache for them.
Earlier, it was a type of social banking system, created for the good of the needy, where the whole village came to the help. There was no surety given in writing for the amount contributed, but everyone paid back promptly as and when required, without a fuss. Though there was no written law they considered it as mandatory to attend such events.