Bengaluru: In a bid to invigorate the rural economy and promote safe investment and savings among the public, the Karnataka government has decided to extend the MSIL chit business across the state.
A taluk branch has been inaugurated with an initial business target of Rs 2 crore per annum. The aim is to generate at least Rs 10,000 crore in the next 2-3 years through representatives or women’s self-help groups, following the successful model in neighboring Kerala.
The expansion of the Mysore Sales International Limited (MSIL) chit business is designed to create an institutionalised framework for savings and loans, protecting the public from potential fraud associated with private moneylenders operating chits. This initiative has been piloted successfully in four Gram Panchayats, including Kaggalipur, Somanahalli, and Taralu in Bangalore urban district, with chits ranging from Rs 30,000 to Rs 5 lakh.
All transactions, including the collection and return of chits, will be managed through a dedicated app. After a successful pilot phase, tenders have been invited for the development of the app, and the technical bid process is underway. MSIL is gearing up to manage the chits business efficiently, appointing representatives at each panchayat or one per 2,000 population.
Chits ranging from Rs 2,000 per month are being formulated to facilitate seamless financial transactions, particularly among women in rural areas. Programmes like Grulahakshmi have boosted the flow of money among women. The government chit initiative aims to attract women initially, engaging women’s self-help societies across the state due to their excellent track record of 100% bank loan repayment.
The MSIL chits business commenced in the state in 2005, with 27 branches currently operating in various parts, handling chit transactions ranging from Rs 50,000 to Rs 50 lakh. With a customer base of 26,000 in the state, the business has witnessed transactions amounting to Rs 430 crore in the current year.
Industries minister and MSIL chairman MB Patil highlighted the success of micro chits in Kerala, with the Kerala State Finance Enterprises (KSFE) playing a pivotal role in the state’s economy. Drawing inspiration from Kerala, the government aims to expand the chit business statewide and usher in a new development model through the concept of universal basic income. The government envisions replicating the success achieved by KSFE, targeting a robust chit business contributing significantly to the economic landscape.