Picture used for representative purpose only
Chit funds have taken a hit after the recent demonetisation of Rs 500 and Rs 1,000 notes.
A lot of people, including housewives, labourers and small-scale industry owners, have been affected. Those who invested in chit funds and got their share of money in the first week of the month have been the worst affected, as they received all of it in the now-demonetised currency.
Because of the lack of documents and the huge lump sums involved, those who were part of small-capital unorganised chit funds have now either closed the scheme for fear of law or are waiting for things to return to normal to continue investing.
When City Spidey spoke to people in Dwarka involved in the scheme, they shared their views on condition of anonymity.
A housewife from Sector 14, Dwarka, said she was initially overjoyed that it was her turn to receive the chit fund amount this month, but given the sudden demonetisation, she was now facing problems exchanging the money. “I received the amount on November 9. Though I didn’t want to accept old currency notes, I had no choice. Rs 1 lakh is a big amount and I am nervous, as my family doesn't know about this investment. Now I have to ask my husband to deposit it in his account. It's very sad how the savings system we had put in place with this chit fund has collapsed,” she said.
Those who are cashiers for unorganised chit funds said that people were losing faith in the system. “There are no documents involved, as these chit funds run only on the trust and faith of the people involved. It is mainly housewives, shopkeepers and service-class people who participate in chit funds. Now they are sceptical of this scheme,” said RK Singh, a Sector 6 chit fund treasurer.
Some said that though most chit fund cycles began on the 10th of every month, the November 8 announcement affected people badly. Smriti Sharma, a resident of Sector 12, said, “The scheme gave us financial support in times of crisis. It reflected the familial aspect of helping one another. But now many people have stopped investing in it. We can't rely on it any more.”
