final project(gayatri).pdf

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Chapter1

INTRODUCTION


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1.1 General Introduction

Savings form an important part of the economy of any nation. With the savings

invested in various options available to the people, the money acts as the driver for

growth of the country. Indian financial scene too presents a plethora of avenues to the

investors. Though certainly not the best or deepest of markets in the world, it has

reasonable options for an ordinary man to invest his savings. For an ordinary person

though, they have acted as the safest investment avenue wherein a person deposits

money and earns interest on it.

The objectives of making investments are many and varied and differ from

person to person. These may be either to get a regular, uniform, safe and continuous

return in the future with moderate risk or to enjoy the benefits of capital appreciation

with attached risk. An individuals investment objectives also depend on various

personal factors, such his/her age, sex, occupation, educational level etc.

Chits provide a good source of finance for different type of people Viz.., small

investors, businessmen, small scale industrialists etc. chits are a good means of

savings for any contingency requiring substantial amount. It serves all persons

whether they desire for savings or borrowing to meet extraordinary expenses on

special occasions like marriages, construction of houses etc.,

Adequate care is necessary to choose a suitable group. The selection of a

particular group largely depends on the subscribers capacity to provide surplus funds

month after month from his normal income for the subscriber as well as the companys

point of view to avoid any embarrassment at the time of releasing the prize money or

in releasing chit installments month after month.

Chit

It is a contract between the foreman, as the promoter is called, and the

subscribers, who join voluntarily. It is a financial system under which the periodical

and regular savings of a group of subscribers are made available to each subscriber,

a specified amount every month (installment) for a specified period.

The pooled funds every month are offered to the subscribers at monthly

auctions and the subscribers who bids for the highest discount is declared the prize

winner and given the prize amount a proper security. A prized subscriber also should

continue to pay the subscriptions till the termination of the chit. The amount foregone


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as discount, less foremans commission is distributing among the subscribers as

dividend.

Chit group

A chit group refers to a specified number of members agreeing to subscribe a

specified amount for a specified period. For example, 40 members, 40 months,

Rs.500/- a month. The number of members and the number of months to be same.

Foreman

Any person under the act responsible for the conduct of the chit and includes

any person, such as branch manager, discharging his functions.

Validity of the contract of the subscribers with the foreman for an

identification period

The contract of the subscribers with the foreman is valid only for the duration of

a chit group and until the liabilities of subscribers to foreman or vice versa are

discharged or paid in full.

Benefits of chit subscribers

a) To save in small amounts to receive a lump sum during the period of chit.

b) To borrow the future savings in advance. Some subscribers join chit funds to

borrow and others to save.

Chit agreement

The chit agreement is a contract between the foreman and the individual

subscribers to a chit group. It is a set bye-laws or regulations dealing with procedurefor the conduct of chits. It will be signed in duplicate, duly witnessed. The chit

agreements shall contain the name and address of the subscriber, the number of

installments and the installment amount payable, the interest/penalty for delayed

payment, the probable date of commencement of chit and its duration, the manner of

deciding the prize winner at each installement, the maximum discount to be foregone

at each installment, the mode and proportion of dividend and foremans commission,

the date, time and place of auction, the installement at which the foreman is to get the

chit amount, the name of the bank, the security to be furnished by prized subscriber


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etc., though each subscriber sign a declaration in the application from that he has read

and understood the terms and conditions of the chit agreement, the declaration of all

the subscribers are detached from the application form, pasted in a piece of paper and

filed with the registrar.

Process of enrolling subscribers for a group

The subscribes have to fill in an application form furnishing particulars of their

names, residential and office addresses, approximate gross monthly salary, names of

nominees and their relationship to them. They also have to sign the declaration that

they have read and understood the terms & conditions of the chit agreement.

1.2 Need for the study

Chit is a traditional method of financing. This study which gives a broad idea

about customers in chits. At present scenario customers are not satisfied in the chits

because due to rapid growth bogus chit funds to know the satisfaction level of the

customers in Neeladri chits, I preferred to do this study.

1.3 Objectives of the study

To find out the reasons for investing in chit funds.

To find out the socio-economic factors.

To examine the awareness level of investor.

To study the preferences of investors in choosing the investment.

To analyse the factors which favours the investors to make investment.

1.4 SCOPE OF THE PROJECT WORK

This study help us to know about the chit fund and their procedure.

This study help us to know about the awareness and preferences of investors.

Through this study to know about the investors investing in the company.

To assess the level of satisfaction with Neeladri chit funds and so that corrective

action can be taken needed.

1.5 Review of literature

V. Krishnan mentioned the growth, importance, types, features and

malpractices of chit funds. The favouring circumstances that fostered the growth of the

chit funds were the lack of organized credit facilities to permit of savings deposits, the


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accommodation of small capital and the availability of loans on easy terms. The

dominant feature of the transaction

The chit funds show a great deal of adaptability to the conditions that prevail

in the area in which they have to operate. The indebted landlord, the needy trader, the

improvident weavers and other artisans, the hard working daily labourers and factory

workers and the helpless vegetable vendors all derive benefit from the transaction.

There are importantly three types of chits, (1) The Thattu chit, (2) The Auction chit, (3)

The Prize or the lottery chit. It is inevitable that there are a variety of malpractices in

the system. If such malpractices are only lapses that are bound to exist in any

institution then efforts should be taken to bring the working of such institution under

rigid control to reduce malpractices to the minimum.

Srinivas and Higuchi Observed that Chit funds have been grouped under the

category Mutual Credit Suppliers, because the demand and supply of credit is mutual-

that there is a give and take process involved. Participants typically support each other

for credit needs in mutuality. The money supplied or saved by some participants is lent

and borrowed by some other participants. Thus the benefits of the operation are

mutual to all participants and equally distributed. The central idea of mutual credit

suppliers is that they encourage savings from the participants. According to the

information given by The Banking Commission nine banks in Andhra Pradesh,

Kerala, Mysore and Tamil Nadu were conducting chit funds in 1968.

Dr. C.P.S. Nayarhad tried to place the role of Chit Funds in the proper financial

perspective. The study emphasized the need to regulate the activities of Chit Funds,

and at the same time, perceived their role as active mobilisers of savings of the

community and as a useful complement to other financial institutions. The work was

an attempt to study all the known types of chit funds, classifying, naming and definingthem wherever necessary. The study also attempted to examine the economic aspects

of chit funds on an empirical and analytical basis. The analysis covered all the patterns

of business of chit funds working throughout the country.

The Author also pointed out that the basic principle underlying a chitty is

accumulation of savings. The unique feature of savings in a chitty as against the

savings in other types of financial institutions such as commercial bank, the post office

savings bank, etc. is that there is a sort of compulsion in effective savings. While

examining the history of chit funds, Nayar has also discussed different stages of their


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evolution. Stated that the original home of chit funds is South India, in the last three

decades there has taken place a growth of chit funds in several parts of India. He has

mentioned the growth of chit funds in the Union Territory of Delhi and in the state of

Maharashtra. He estimated the annual turnover of business of 125 chit companies at

.217 lakh, in Maharashtra and in Delhi, 109 registered companies with annual

turnover of 1.6 Crore, by the end of 1968-69.

The study ofDr. C.P.S Nayar, highlighted that the chit funds is different from

othersSavings and credit institutions in that it is more than a savings bank to the saver

and more than a lender to the borrower. The chitty offers many facilities to the

borrowers. (1) The loans in most cases are unconditional. (2) They are clean loans.

Tangible assets are rarely used as security. (3) They can be rapid in easy installments.

(4) The borrower need not keep a margin for the loan. The increasing popularity of

chit funds even in those areas where the banking habit of the people is wide spread

shows that the scheme is basically sound and cannot be brushed aside as an

irrelevant or anachronistic business practice. It becomes easy when the chit funds are

operated by disciplined institutions such as the commercial bank, a Government

owned company or a public limited company.

Shri K.M. Balavenkataramanastudied about progenitor Moyy Murai. Moyy

means call money pooled and Murai means custom. It was a sahaya-nidhi, with a

strong element of co-operative spirit. The principle of chit fund was known to rural

India for a fairly long time. For years, women in villages had formed the habit of saving

a handful of rice or other grains for a rainy day, and this became very useful to face

unexpected guests and unforeseen expenditure. A chit fund is a financial arrangement

or institution based on mutual trust and confidence. A chit fund is primarily a mutual

benefit society in which some people join to save and others to borrow. A financialintermediary gathers the savings of the people and distributes the funds to numerous

borrowers, thus affecting the allocation of real resources. The difference of a financial

intermediary and a chit fund is, chit fund collects the savings of the members by

periodical subscriptions for a definite period of time, and it connects the borrowing

class directly with the lending class and the pooled saving is lent out to the same group

of savers.

In so far as the chit funds have no control over the end-use of the funds, the

intermediation does not necessarily result in an efficient use of resources. The efficient


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use of resources takes place only in the case of those members who utilize the prize

amount in acquiring income-earning assets, which directly or indirectly promote capital

formation. It is therefore; better to consider chit funds as a co-operative endeavour.

G. jagadisanindicated that, some measures of regulation of chit funds. Chit

funds like any other non-banking financial institution are treated as Para-banking

institution. It has been recognized that chit funds arose at a time when banking facilities

had not developed and thus they filled an important credit gap in the economy. Another

important aspect is that many companies are coming to rely upon chit funds as a

source of finance. The fact that the strength to a chit fund company is the foreman and

his reputation for promptness, straight forwardness and honesty. It is very essential

that the number of chit companies in each state is reduced over a period of time so

that supervision and control become effective. Every chit company should obtain a

license before commencing its business. And also the company should be issued the

license only if it furnishes the bank guarantee. Government should use the banks as

agents to supervise the working of chit funds. Besides it will make the Reserve Bank

to exercise some control over chit funds.

S. Narayanaswamy addressed that chit fund was attractive in so far as it

proved a ready-money bank for the subscriber, what time it was equally attractive for

the enterprising foreman, who got the feel of the subscribers monthly contribution on

which he paid no interest, though he was free to earn it himself by sagacious and

shrewd investment. The five per cent commission is the wage for his organizing the

outfit. Chit fund was born and has stayed to serve the needs of a closely knit

community of people living very near each other often in the same village, each of

whom was keenly conscious of the rainy day that might call abruptly for a large sum

of money. Communications were tenuous or did not exist. Perhaps, the close proximityof all subscribers made for smooth and successful conduct of the chit operations.

Mohandas attempted to evaluate the Central Chit Funds Act 1982 as a

regulatory measure for chit business. And also deal with the features of Chit finance,

conceptual issues involved in chit fund regulation and also with the economic

implications of the major provisions of the Act. The study suggested a graduated

ceiling on discount ranging from thirty to fifty per cent for chits of different durations.

To eliminate unnecessary competitive bidding, the study recommended restriction on

open bidding up to twenty five or thirty per cent of the chit amount and allow further


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bidding up to fifty or sixty per cent only on the production of cash deposits above the

initial limit. The study also analysed the economic gain to the saver and cost of

borrowing in terms of effective annual interest yield and effective annual interest cost.

Itoop M.Lhas identified the factors leading to the growth of Chit Funds in

Kerala especially in the 1980s. He also examined its utility as a saving instrument and

supplier of easy credit and thus employment potential. The findings of the research

revealed that quries help industry, agriculture and even house construction. The only

unproductive expenditure related to the money spent on marriages and on durable

consumer goods. The study also found that the cost of credit is cheaper compared to

the cost of credit with reference to the commercial banks other financial institutions.

Joseph M A evaluated various savings / investment schemes available in

comparison to the chit schemes. It showed that chit schemes can be treated as the

best investment alternative available. The rate of return on chit was calculated by

dividing the annual dividend by the annual net subscription. The study showed that the

rate of return calculated for a chit was much more than the rate of return applicable to

the various investment alternatives. It also presented the various characteristics of

chit schemes and concluded that unauthorized chit business was in the ruins due to

hard and stringent provisions of the enactments and KSFE was far away from the

reach of the common people.

S. Radhakrishnan argued that Chit Funds and Nidhis have not received the

attention they deserved in the scheme of reforms. The paper included certain

measures of reforms to enable Chit Funds to grow on sound and healthy lines,

including the introduction of credit rating for all incorporated Chit Fund companies.

Indira Raja Ramantried to explain Rotating Savings and Credit Associations

and their similarities with Chit Funds in India. The article showed that theseassociations are functional in various parts of the world including highly developed

countries. Random ROSCAs are similar to Prize chits in India, while bidding ROSCAs

are similar to our Auction chits.

Rajendran attempted to provide a brief resume of the evolution of credit in

Kerala, the different practices and the institutions concerned, since the beginning of

the 19thcentury. The role of chitties in terms of their number, extent and volume of

operation up to 1936 has been included in the study. The study pointed out that the


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vital links between the preinstitutional and the institutional phases were provided by

Chit Funds which gradually emerged into banking institutions.

Namrata Acharya mentioned that chit funds are looking down in terms of

number and are growing in terms of value. The registered chit funds find it less

lucrative to fund the poor due to the rising operating costs. According to AIACF,

running chit funds is no longer viable. Though the money circulated has increased, the

number is going down. It may come down further in the years to come. On the other

hand, unregistered chit funds have found a utility in evading tax and access to large

deposits. The clout of unregistered chit funds is tremendous. The number of

unregistered companies is almost 100 times than the registered companies.

Prof. Mudit Kapoor opined strongly that the chit funds are an important source

of finance for small businesses and low-income households in India. Registered chit

funds are away from low value chit schemes due to increased operational costs and

strict rules imposed by Government. Chit funds are very safe mode of financing and

saving. They offer loans at lower interest rates than money lenders and sometimes

than banks also. The size of the unregistered chit funds is stated about 67 times of the

registered industry in Delhi and 3.2 times in Chennai. On an average 50% of chit fund

clients are poor households and most of them save for particular target events like

marriage, education etc., and also they value the flexible provision of credit.

Customers feel comfortable with the bidding process and 96% of them perceiving

registered chit industry as safe or very safe. Most funds have moved away from

smaller chit schemes due to strict regulatory norms imposed by the Government and

increasing wealth levels in India.

Preethi Rao suggested that chit funds are good financial sources to small

businesses, which has been suffered from the money lenders with their high cost ofloans and banks with their stringent procedures. They can save the money with chit

funds and when in any emergency need of capital they can take loan out of the money

saved. The Author has mentioned the reasons of failures of chit funds, like the

regulatory hurdles due to the stringent rules proposed by the Government and the

increased costs of operations for the registered companies are the setbacks of the

industry. Because of these reasons, the registered companies are shifting their

operations to unregistered companies.


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Chapter - 2

ABOUT THE COMPANY


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2.1 COMPANY PROFILE

Neeladri Chit Fund Private Limited has exhibited expertise in the financial area and

solid operational excellence ever-since 1988 its incorporation. Neeladri provides goodsource of finance not only savings to House holders, Employees, Business people and

also different types of people Viz., small investors, businessmen, Women

Entrepreneurs small scale industrialists etc. It also provides a means of savings for

contingencies.

A chit is, therefore a good Low, Medium, High Class persons desirous of saving as

well as people who like to borrow / Investment to meet expenses on special occasions

like marriages construction of house etc.., and funds for business or industrylike any

other needs. A person can choose a suitable chit group depending on his capacity to

provide extra funds, month after month. The potential to pay regularly is the important

criteria to choose a suitable chit group.

Products and services

Chit fund services

Lorries services

Fund services

Mutual fund services

NCFPL Objects

This chit is aimed to encourage saving habit among members and help them to meet

their financial needs on the principles of cooperation, good faith and trusteeship

among the members and the company as the foreman, who conducts auction or

drawing chits.

NCFPL Enrolment

Members who intending to become subscribers shall be enrolled on receipt of

application in prescribed form mentioning the group number and details of the chit

along with the 1stinstallement. The foreman reserve the right to refuse admission to

any applicant without assigning any reason what so ever. On admission, every

subscriber shall be given an enrolment number and a chit pass book with all details.

In case of loss/torn of pass-book, a duplicate pass book will be issued against a

payment of Rs. 100/-


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Mode of payments

The Forman/company shall not responsible for any payment made to an un-

authorised person. Subscriber shall pay the instalments wide account payee

cheques/pay-orders/DDS. In case of cash payment it is the responsibility of the

subscriber to get a proper receipt for the same. Outstation cheques are not accepted.

A sum of Rs. 200/- will be charged as bank charges in case of return of cheques by

the bankers (dishonour of cheques).

NCPFL Monthly chit auction:

Chit auctions for all groups are conducted once in a month. Chit amount will be

paid to a successful bidder (i.e. prized subscriber) offering the highest discount subject

to the condition that the maximum discount shall not exceed 30% to 35% of the chit

value. If more than one subscriber agree to forego the maximum discount, the

successful bidder will be decided by draw of lots. Only subscribers who have paid their

chit installments up to date without any default will be eligible to participate in chit

auction. Nominated proxy will be allowed to attend the auction on prior approval in

case of absence of a subscriber. Non prized subscriber will be allowed to take part in

further auctions or to be included in the future draw of the chit.

Date and venue of auction:

Date of 1stauction will be intimated to the respective subscribers on completion of

the enrollment of each group. The foreman will try to conduct the auction on 4 th

Saturday of every month, so that the subscribers need not take leave from office to

participate in auction. If such auction day falls on a public holiday, the auction will be

held on next week on the same day.

Payment to prized subscribers:

Chit amount will be paid to a successful bidder (prized subscriber) after 7 days

from furnishing necessary securities to the satisfaction of the foreman for the payment

of future installments due from them & completion of necessary documents, in the form

of account payee cheque.

NCFPL last date for installement & penalty:

Last date for payment of monthly installement is before the day of every action

date of each month. Subscribers who make the payment after auction date are eligible

for penalty.


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Security for payment of chit:

The prized subscribers are required to furnish necessary securities to the

satisfaction of the foreman for the payment of future installments due from them. The

security should be any one of the following:

Two permanent Government servants each drawing an unencumbered

minimum monthly salary or income of Rs.20, 000/-

Assignment of insurance policy provided the surrender value of the policy is at

least one and half times the liability of the prized subscriber.

Deposits with the Foreman in the Chit or otherwise which should not be less

than the subscribersliability to the Foreman.

Bank Guarantee from a Nationalised or Scheduled Bank.

In addition to any one of the above Securities, the prized subscriber has also to

give post-dated cheques covering future Chit Dues etc. All expenses in

connection with the inspection of securities, Registration charges, stamp duty

or legal charges shall be borne by the subscriber.

Additional Sureties:

The Foreman shall be at liberty to call for the further or fresh security/surety or

both from prized subscribers who have drawn chit amount when he finds that what is

furnished is insufficient, inadequate or defective.

Failure of furnishing Security by the Prized Subscriber:

If the prized subscriber fails to furnish the required Security and draw the chit

amount within 15 days of the auction / draw date, the Foreman shall have the power

to cancel the bid or lot of such subscriber and the second last bid offered in that auction

will be confirmed as successful bidder or to re-auction the amount amongst the other

eligible subscribers. If the amount is confirmed at a lesser discount, the difference in

discount shall be borne by the subscriber who fails to draw the amount first.


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Distribution of Auction Discount:

2.5% of the chit amount will be the Foremans Commission and the remaining

auction discount will be distributed equally among all the subscribers as dividend in

the subsequent month by way of reduction in monthly installment. Subject to the

condition that defaulting subscribers will not be entitled for any dividend.

Defaulting non-prized subscribers:

The defaulting subscribers who makes the payment in the subsequent month/s

should pay the interest @ 2% per month on the defaulted installment/s for the period

of default. He/she is also not eligible for the dividend of the default period. The

Foreman may remove any subscriber in default for 3 months or more by giving a notice

in writing. The defaulting subscriber will be entitled to a refund of the actual

subscription paid by him less 2.5% of the Chit value as Foremans Commission after

the termination of the Chit.

In the event of death:

Subscriber before the termination of the chit, the nominee/legal heirs/successors

of the subscriber as per law, shall be eligible to continue the chit and also be liable to

the company to the extent that of the original subscribers liability to the Company. In

case the nominee of a non-prized subscriber is not willing to continue the chit, then

the subscription will be removed and refund (of the actual subscription paid by the

diseased subscriber) to the nominee will be paid less 2.5% of the Chit value as

Foremans Commission after the termination of the Chit.

Amendment of Rules:

The Company reserve to itself the right to amend or decide rules on any matter

that is necessary for the smooth and proper conduct of the chit and the same shall be

binding for all existing as well as future subscribers.

NCFPL advantages

100% transparency for all the chit transactions All our chits registered as per chit fund act, 1982


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the evolution of banking, had its origin in Southern of India, when the transactions

were in the Barter System.

From a humble beginning to its present gigantic growth, the chit fund Institution

has now attained the status of a quasi-banking system, and has turned out to be a

boon to the aggressively growing economy of the nation. According to a report of Asian

Development Bank, the turnover of some 1066 chit fund companies, as far back as

1986 was, an astounding Rs.81.6 billion. The estimated turnover of Registered Chit

companies all over India as of now is exceeding Rs 35,000 crores per annum. Under

the aegis of M/s Bill & Melinda Gates Foundation, we are on the process of reaching

the Lower and Middle income household, in the Micro Finance model. Institute of

Financial Management and Research, Chennai , who were engaged for the first ever

study of this Industry on an all India basis is now on the process of launching different

Pilot Projects in this regard.

Aims and objectives of All India Chit Funds Association:

To create sense of brotherhood, mutual harmony, love and affection among the

members of the Society and to help in solving the internal disputes/ matters of

the members of the Society

The All India Association of Chit Funds an Apex body at the national level, committed

to:

Confederate the functioning of all State and District Chit Associations in India,

promote ethical values in its working, for the overall benefit of the subscribing Public;

propagate and uplift the image of chit fund Industry, bring in value addition in its

working and position this Traditional Financial Technology against other financial

intermediaries in the Financial Inclusion program, without compromising on the

Investor protection measures.

The Association, in existence for the last 3 decades had been interacting with

various government agencies playing a major role in the formulation and

implementation of various legislations at Central and State level. As the Chit Industry

is yet to breathe the fresh air of the ongoing liberalization programme, we have the

huge responsibility of bring in awareness on our role in the National Economy among

the Legislatures, Administrators and the Subscribing Public. As it is not the mere

formulation of legislation but the effective implementation that matter, the need of the


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hour is have a user-friendly legislations, in tune with the ongoing Government policies

Though the total number of members in the Association through the State and District

Associations are exceeding 30,000 in number, the immediate challenge before the

Association is to cover the unregistered segment expected to be at least 100 times of

the registered ones to the mainstream in the overall interest of every one.

Advantages of chits over other financial intermediaries:

It is a borrowing cum savings instrument.

The rate of borrowing is determined by the participants themselves and not by

an external agency.

The intermediation cost is the lowest when compared to other instruments.

The process of intrinsic evaluation based on factors like Social Collateral etc.

give a lead this Institution, over the formal Banking sector, as a Financial

Inclusion Activity etc.

Chit funds for savings and investment:

Investing is a lifelong process. The sooner you start; the better off you'll be in

the long run. It's best to start saving and investing as soon as you start earning money.

The discipline and skills you learn will benefit you for the rest of your life. But no matter

how old you are when you start thinking seriously about saving and investing, it's never

too late to begin.

There are two compelling reason to save using chits

1. A higher rate of return in comparison to a bank deposit.

2. They are liquid in nature. A chit can be used to meet any unforeseen expenditure.

It can also be used to meet a planned expenditure.

A chit is the only financial product that allows you to save and borrow. The rate

of return generated by saving using a chit is much higher than what is offered by banks.

The risk involved in saving using a chit would depend on the chit fund company. We

would recommend using a registered chit fund company which has been operating for

at least a decade or more with a proven track record. While parking your hard-earned

money as a fixed deposit with a bank would entail no or negligible risk and similarly

generate less returns, rotating your funds using a chit fund would entail low risk while

generating competitive returns annually depending upon which month you lift the chit.


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An intelligent investor is one who diversifies his risk portfolio. Entire disposable

income or surplus income should not be invested in any one single financial product

alone. Investments must be spread across various financial products like Insurance,

Stocks, Mutual Funds, Bank Deposits and Chits.

The individual investor should act consistently as an investor and not as a

speculator. This means that he should be able to justify every purchase he makes and

each price he pays by impersonal, objective reasoning that satisfies him that he is

getting more than his moneys worth for his purchaseMark Cuban.

Chit as a loan:

Small and Medium Enterprises (SMEs)

Cash flows are the lifeline of business - big or small. Usually big businesses

manage to meet their capital requirements with the help of banks and other formal

financial channels. Banks extend timely support to big enterprises and it is a win-win

situation for both parties. Small businesses are traditionally avoided by banks and

formal financial institutions because of their accounting procedures, lack of proper

recordkeeping and are unable to provide satisfactory security. They have been

historically wedged between the money lenders, with their exorbitant cost of loans,

and banks, with their stringent procedures. Chit funds are a more suitable financing

model for small businesses mainly because they do not require rigorous

documentation. Chit funds have been helping small businesses overcome their

financial constraints. As and when the need arises, SMEs bid in the auction and

receive the loan out of their own funds. Once they receive the loan, they continue to

pay the monthly contributions, and this accounts for payment towards both the interest

and principal which makes the repayment easier and less arduous. Also, in chit funds,small traders can decide their own interest rates depending on their need. Chit fund

interest rates are in effect the market determined interest rates. Thus a small

enterprise, with prudent planning can meet their capital requirements with the help of

a Chit Fund.

Individual / Family

All of us would like to own a Car, a Home, Land, a Personal Computer an LCD

TV and myriad other possessions to make our life worth living. It is possible to own


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every conceivable luxury with proper financial planning. In short you can fulfil every

dream with proper financial discipline. Investing a portion of your income in chits would

help you own any gadget or vehicle land and other assets etc you have been keen on

possessing. An equated monthly installment (EMI) offered by a retail outlet would

include hidden charges and interest costs. Most importantly, the asset itself is

mortgaged/hypothecated to the finance company or retail outlet offering such EMI.

Planning via a chit fund would not entail any such hypothecation and the interest cost

would be equal or less than what is offered by the retail outlet or finance company.

Education and Marriage

For a majority of Indians, Education and Marriage of their children are of prime

importance. Increasing education costs all the way from primary schooling to higher

education and beyond puts the onus on parents to plan for such expenses from the

very beginning. Taking an education loan is expensive in India. Interest rates charged

by banks on an education loans are much higher than home loans since there is no

tangible collateral for the bank when the loan is approved. Investing consistently in

chits would help a parent meet the education expenses of their children.

Marriages in India are an expensive affair. They may be made in heaven buthave to be paid for on earth. Since marriage is inevitable, it must be planned for, more

so in the case of a girl child. Chit Funds can provide the liquidity that is required to

fund a wedding at a much lower interest cost in comparison with bank loan.

Chit vs other financial instruments

Chits (vs) Fixed deposit

A Fixed deposit is accepted for a pre-determined time period. Interest paid by

banks range between 7.5-9.5% and is dependent on government regulation. The

interest earned from fixed deposits can either be taken out periodically

(monthly/quarterly/half yearly/yearly) or an investor can earn cumulative interest which

is paid at the end of the term period. Fixed deposits offered by corporate sector carry

a higher rate of interest but are risky and an investor will have to take an informed

decision. A fixed deposit is illiquid. The principle amount cannot be used by the

investor, if he has to incur any unforeseen expenditure. If the investor opts for a


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cumulative interest group, the entire amount is returned only on maturity of the fixed

deposit.

A chit on the other hand can help an investor by paying him an competitive

interest rate than banks. The interest is paid in the form of dividend. If an investor has

lump sum amount, he can invest the same in a vacant chit. By investing in a vacant

chit, the waiting period is shorter; the investor can participate in an auction and use

those funds for any planned or unplanned expenditure or wait until the end of the chit

and enjoy higher dividends.

Chits (vs) Recurring deposits

Recurring Deposit scheme is offered by almost all banks in one form or the

other. Recurring Deposit is very popular among the salaried class, especially who can

afford to save only few hundred or say few thousand rupees per month. This scheme

is a boon for people who do not have a large amount of savings and thus cannot use

the Fixed Deposit scheme of the banks. Under this scheme, the customer deposits a

minimum amount (normally fixed) every month and bank pays the interest at the pre-

determined rates (which is usually lower than that for fixed deposits). At the end of

the period i.e. on maturity date, the customer is paid the maturity value i.e. principledeposited and the interest payable. The current rate offered by banks is around 8.5%.

This is subject to government regulation.

The same money can be invested in a chits and the investor can earn more than bank

rates. He can also borrow against the chit which is not possible with a recurring

deposit.

Chit (vs) Bank Loans

Tremendous growth in the banking sector has seen an explosion of personal

loans given to young salaried employees in the information technology, BPO and other

sectors. This segment has higher disposable income and is willing to spend on cars,

motorbikes and the like. Banks/financial institutions charge an interest rate anywhere

between 12-24% on personal loans. There is also no guarantee that the loan

application will be accepted. The Equated Monthly Installments (EMIs) are higher due

to higher interest costs. If an employee is smart, he can plan his purchase of a car


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using a chit. The interest cost, paperwork and sureties required are much lesser in

comparison with a personal loan.

Chits (vs) Mutual Funds

Systematic Investment Plans or SIPs as they are popularly known are

marketed aggressively to the younger generation, high net worth individuals and the

like. A SIP is a financial scheme where investments are made daily, monthly or

quarterly. These investments are invested by the fund company in the stock markets.

Every fund has a Net Asset Value (NAV). The fund issues shares. The number of units

allotted to the investor would depend on the amount he invests and the NAV of the

fund at that particular point in time. So the number of units issued would vary

depending on the NAV. It is important to note that the NAV is entirely dependent on

the market conditions prevailing at that time. There are chances where the current

value of investment is less than the actual cost of investment. There are entry and exit

loads i.e. charges which have to be paid by the investor to join or exit the fund. To sum

up investing in a mutual fund carries moderate to high risk depending on the market.

Investing in a chit is similar to a SIP, where the investor would invest money monthly

into a chit fund group he chooses. The monthly installment would vary depending on

the competition in the group. There is no entry or exit fee charged and the risk involved

in investing here would be very low in comparison to a mutual fund.

Chits (vs) Credit Card

Credit card is a convenient way to spend money. It entices the customer as he

does not have to shell out any money when he makes purchases at a retail store. It

also induces him to spend more than he can actually afford with the BUY NOWPAY

LATER mantra. The bank at the end of the billing cycle, which is usually at the end of

the month, allows its customer to pay a minimum balance instead of the full amount

allowing its customer to carry the remaining balance to the next month. The bank allots

a higher credit amount without giving much thought to the paying capacity of the

customer. The customer falls into this trap by buying more than he can afford, paying

the minimum balance at the end of the month, transferring remaining balance to the

next month. This becomes a vicious cycle. Little does the customer realize that he is

charged exorbitantly almost up to 40% when the credit card balance is revolved in thismanner? He gets caught in the credit card debt trap.


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A smart investor would want to use the SAVE-BORROW-PAY mantra instead

of BUY NOWPAY LATER. He would save at a higher interest cost, borrow at a lower

cost and rescue himself form unnecessarily exorbitant interest costs. This is possible

by having financial discipline and by planning, investing and saving and borrowing

using chits.

Chits (vs) Stock Markets

Investing in the stock market requires a lot of personal time and effort to

understand the financials of the stock, to time the market and buy the stock. After

purchasing the stock, the investor cannot be complacent. He must keep a track of the

stock market and the company in which he has brought stock and keep a constant tab

on whether he in must hold or sell the stock. Even an investor who wants to invest for

a five year time period must keep himself abreast with the happenings of the stock

market. He must make financial calculations whether the returns gained from the stock

market may be more than what he would have gained from a less risky financial

instrument, like a chit.


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Chapter3

RESEARCH METHODOLOGY


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Research methodology

Marketing research is the systematic and objective process identifying,

formulating and objective stating of a marketing problem and collecting, processing

analysing, interpreting and presenting data in order to find a justified solution for a

problem that guides the data collection and analyse phases of a research projects.

This research implies the identification of present trends in their fields of marketing

and also identify for alternative courses of action.

There is never a single standard and correct method of carrying out a piece of

research. Because there are many ways to tackle a problem - some good, some bad,

but probably several good ways. There is no single perfect design. A research design

is not like the solution to a problem in algebra. There are three basic types of

research designs, viz., (i) Exploratory, (ii) Descriptive, and (iii) Casual, which are

discussed in the ensuing text.

Fundamental to the success of any formal research project is a sound research

design. A good research design has the characteristics, viz., problem definition,

specific methods of data collection and analysis, time required for research project,

and estimate of expenses to be incurred. The function of a research design is to ensure

that the required data are collected and they are collected accurately and

economically.

A research design is purely and simply the framework or plan for a study that

guides the collection and analysis of data. It is a blueprint that is followed in completing

a study. It may be worthwhile to mention here that a research design is nothing more

than the framework for the study ensures that: (1) the study will be relevant to the

problem, and (2) the study will employ economical procedures.

All marketing research projects must start with exploratory design. This is apreliminary phase and is absolutely essential in order to obtain a proper definition of

problem at hand. The major emphasis is on the discovery of ideas and insights.

Exploratory study is characterized by flexibility and informality; Formal design is

conspicuous by its absence in exploratory studies. Exploratory studies rarely uses

detailed (structured) questionnaires. These do not involve probability-sampling plans.

Ingenuity, judgment and good luck play a part in such studies. Notwithstanding the

flexibility, the research experience has demonstrated that (i) literature surveys, (ii)


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experience surveys, and (iii) analysis of selected cases, are particularly productive in

exploratory research design.

Descriptive research design is also called explanatory design. This is the one

that simply describes something such as demographic characteristics of individuals

who use the product. The descriptive study is typically concerned with determining

frequency with which something occurs or how two variables vary together. This study

is typically guided by an initial hypothesis.

As exploratory study is characterized by its flexibility and informality, a

descriptive study can be considered usually rigid and formal. A descriptive study

requires a clear specifications of what, who, when, where, why and how aspects of the

research. It requires formulation of more specific hypothesis and testing these through

statistical Inference techniques. Despite its merits, the important fundamental

weakness is that descriptive research does not find the cause and effect relationships

among variables.

Studies that establish casual relationships between variables may be termed as

explanatory studies. The emphasis is on studying a situation or a problem in order to

explain the relationships between variables. Experimental or casual is a classical form

of research, which owes much to the natural sciences, although it features strongly in

much social science research, particularly psychology.

The methodology regarding the study on investor awareness & preferences

towards chit funds with reference to Neeladri chit funds private limited Hyderabad is

discussed as below.

3.1 Research design and Area of Study

Research Design is the framework or plan for a study that guides the collection andanalysis of data.

The research design can either be

(i)Exploratory, (ii) Descriptive, or (iii) Experimental Design

The type of research design chosen for this study is descriptive design and

quantitative in nature.


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3.2Data collections methods

There are two types of data are there

Primary Data

Secondary Data

3.2.1Primary Data collection

Relating to study the primary data was collected from different respondents like

salaried people, professionals, business people, and retried people who are living in

different places.

3.2.2 Secondary Data

Auto-magazines, company brochures and trade journal books, magazines and

other trade journals played a major role in collection of secondary data.

Questions formulations and wordings

In general all questions were framed keeping in the mind the following standards:

They should be easily understood by respondents.

They should be concentrating and should conform as much as possible to the

respondents way of thinking.

3.3 Research InstrumentQuestionnaires were developed to carry out the survey. Different types of

questioning methods like Open-ended, Multiple choice, and Ranking questions were

employed.

In this method, a pre-printed list of questions arranged in sequence is using to

elicit response from the informants. The questionnaire is mailed to respondents who

are expected to read and understand the questions and write down the reply in the

space meant for the purpose in the questionnaire itself.

3.4 sampling proceeds

3.4.1 Sample size

Sample size for the study was fixed at 100 customers.

3.4.2 Sampling method

The questionnaire designed is structured questionnaire consisting of close ended,

multiple choices, dichotomous, and open-ended questions to appropriateness.


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3.5 Pilot survey

The pilot study of 10 samples has been collected to identify the effectiveness of the

questionnaire; as no modification was required in the questionnaire. The same

questionnaire was used for final survey.

3.6 Period of study

The study was undertaken for a period of two months, including data preparation,

analysis and report presentation.

Objectives were set and questionnaire was finalized.

Data were collected and recorded.

Data were analysed and interpreted.

Reports were generated.

3.7 Statistical tools used

Percentage method

The percentage method was extensively used for finding various details as mentioned

in the chapter at analysis and interpretation. It can be generally calculated as follow.

No of respondents favourable

Percentage = ______________________________

Total respondents

3.8 limitations of the study

The market survey was conducted in different places but still it may not reflect

the original opinion of all the customers.

Because of time constraints, the sample size is restricted to 100, which may not

reflect the original market.

The percentages and Averages calculated are rounded off to the nearest

decimal point, where absolute accuracy may be absent.


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Analysis and Interpretation

The data after collection has to be processed and analysed in accordance with the

outline laid down for the purpose at the time of developing the research plan. This is

essential for the scientific study and for ensuring that we have all the relevant data.

Processing implies editing, coding, classification, and tabulation of collected data so

that they acquiescent to analysis.

Part1

The 1st part of this presents the economic factors of the respondents by taking

variables such as gender, age, employment, monthly income etc.

SocioEconomic factors of respondents

Sl.no Factors Category Frequency Percentage

1 Gender Male 84 84%

Female 16 16%

2 Age 18-25 8 8%

25-40 20 20%

40-60 36 36%

Above 60 36 36%

3 Employment Govt. Employee 12 12%

Professional 12 12%

Private firm

Employee

16 16%

Self Employed 20 20%

Business person 4 4%

Agriculturist 20 20%

Others 16 16%

4 Income Below Rs. 1 lakh 68 68%

Between 1 lakh to

2 lakh

12 12%


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Between 2 lakh to

3 lakh

16 16%

Between 3 lakh to

4 lakh

0 0%

Between 4 lakh to

5 lakh

0 0%

Above Rs. 5 lakh 4 4%

Source: Primary data Table5.1.1

Interpretation:

It is observed from the table that out of 100 respondents, 36% of the respondents are

in the age of 25-40 years and 40- 60 years and nearly 84% are males. Majority of

respondents are working like farmers and self- employment and their income Rs.1 lakh

below per annum.


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Table no 4.1.1No of respondents indicating gender

Gender No of respondents Percentage

Female 16 16%

Male 84 84%

Source: primary data Table4.1.1

Fig no4.1.1

Interpretation:

The above table shows that 84% of population are male where as 16% of population

are female.

84%

16%

Male Female


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Table no 4.1.2 - AGE WISE CLASSIFICATION OF RESPONDENTS:

Source: primary data Table 4.1.2

Fig 4.1.2

Interpretation:

The above table indicates that 8% of respondents lie between 18 to 25 age group.

20% of respondents lie between the age group of 25-40. 36% of respondents lie

between the age group of 40-60 and 36% of respondents are of more above 60 years.

0

5

10

15

20

25

30

35

40

18 to 25 25 to 40 40 to 60 Above 60

Age No of respondents Percentage

18 to 25 8 8%

25 to 40 20 20%

40 to 60 36 36%

Above 60 36 36%


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Table no 4.1.3- Categories of the respondents

Category No of respondents Percentage

Government employees 12 12%

Professional 12 12%

Private employees 16 16%

Self employed 20 20%

Business person 20 20%

Farmers 16 16%

Others 4 4%


Fig 4.1.3

Interpretation: The above table indicates that 12% of respondents are

government employees, 12% of respondents are professionals, 16% of respondents

are private employees, 20% are self-employed, 20% are business people,16% are

farmers and remaining 4% belongs to others.

0

5

10

15

20

25


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Table no 4.1.4 - Annual income is in the range of different people

Annual income No of respondents Percentage

Below 1 lakh 68 68%

Between 1 lakhs to 2 lakhs 12 12%




Above 5 lakhs 4 4%


Fig 4.1.4

Interpretation: The above shows that 68% of respondents lie below 1 lakh income

group, 12% of respondents are between 1 to 2 lakhs of income group, 16% of

respondents are between 2 to 3 lakhs of income group, 4% of respondents are under

the group of above 5 lakhs income. No respondent lie between 3 to 4 and 4 to 5 lakhs

income group.

0 20 40 60 80

Below 1 lakh

Between 1 lakhs to 2lakhs




Above 5 lakhs

Series1


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Part2

The second part of this chapter analyses the investment Awareness and Preferences

of investors.

Table no 4.2.1 - Investment of savings most


Fig.no4.2.1

Interpretation:

The table shows that 56% of respondents are investing theirsavings mainly in savings

bank, 12% of respondents are investing in fixed deposits, 12% in shares/debentures,

12% are investing in chit funds and8% are investing in insurance.

0

10

20

30

40

50

60

Investment avenues No of respondents Percentage

Savings bank 56 56%

Fixed deposit 12 12%

Shares/debentures 12 12%

Postal savings 0 0%

Chit funds 12 12%

Insurance 8 8%

Others 0 0%


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Table no 4.2.2 - Awareness of chit funds

Awareness No of respondents Percentage

Yes 84 84%No 16 16%


Yes 84%

No 16%

Fig no4.2.2

Interpretation:

The table shows that 84% of respondents are aware of chit funds whereas 16% are

not aware of chit funds.

16%

84%


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Table no 4.2.3 - Primary goal of your investment

Primary goal of

investing

No of respondents Percentage

Education 24 24%

House 16 16%

Retirement benefits 4 4%

Others 56 56%


Fig no - 4.2.3

Interpretation:

The above shows that 56% of the respondentsprimary goal of investment Belongs to

others, 24% of the respondentsprimary goal of investment is for education purpose

and 16% of the respondentsgoal is for retirement benefits.

0

10

20

30

40

50

60

Education House Retirement benefits Others


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Table no 4.2.4 - Influential factors towards the respondent to

participate in the chit

Persons No of respondents Percentage

Family 62 62

Friends 19 19

Business partners 0 0

Chit agents 14 14

Others 5 5


Fig no4.2.4.

Interpretation:The above table shows that 62% of the respondents are introduced by their family to

invest in chitfunds.19% of the respondents are introduced by friends, 14% are

introduced by chit agents and 5% are introduced by others.

62%19%

0%

14%

5%

Family

Friends

Business

partners

Chit agents

Others


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Table no 4.2.5 - No of years they are participating in chit funds

according to respondents

Since when No of respondents Percentage

1 to 2 yrs. 48 48%

2 to 3 yrs. 10 10%

3 to 5 yrs. 0 0%

5 to 10 yrs. 9 9%

Above 10 33 33%


Fig no4.2.5

Interpretation:

From the above table it is known that 48% of the respondents are members of chit

funds from 1 to 2 years. 33% of the respondents are the members of chit funds from

10 years above. Only 9% of the respondents are the members between 5 to 10 years

and 10% of the respondents lie between 2 to 3 years.

48%

10%0%

9%

33%

NO OF RESPONDENTS

1 to 2 yrs. 2 to 3 yrs. 3 to 5 yrs. 5 to 10 yrs. Above 10


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Table no4.2.6 participating a member in chit group

Chit groups No of respondents Percentage

1 lakh 71 71%

5lakhs 24 24%

10lakhs 0 0%

Above 10 lakhs 5 5%


Fig no4.2.6

Interpretation:

The above table shows that 71% of respondents belong to 1 lakh chit fund group, 24%

of respondents are belong to 5 lakhs chit fund group and 5% of respondents are above

10 lakhs chit fund groups.

0

10

20

30

40

50

60

70

80

1 lakh 5lakhs 10lakhs Above 10 lakhs


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Table no 4.2.7 Performance of the respondent regarding the level of

bidding.

Normally bid for chitNo of

respondentsPercentage

Between 2nd to 10th month 52 52%

Between 11th to 20th month 22 22%

Between 21st to 30thmonth 8 8%

As need arises 18 18%


Fig no - 4.2.7

INTERPRETATION:

The above table shows that 18% of the respondents bid when need arises, 52% of the

respondents bid between 2ndand 10thmonth, 22% of the respondents bid between

11thto 20thmonth and 8% of the respondents bid between 21stand 30thmonth.

0 10 20 30 40 50 60

Between 2nd to 10th month

Between 11th to 20th month

Between 21st to 30th month

As need arises

No of respondents


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Table no 4.2.8 - Maximum percentage of bid the participants would

forego

Maximum % of bid No of respondents Percentage

5-10% 56 56%

10-15% 24 24%

15-20% 16 16%

more than 20% 4 4%


Fig no4.2.8

Interpretation:

From the above table 56% of the respondents would forego 5-10%, 24% of the

respondents would forego 10-15%, 16% of the respondents would forego 15-20% and

4% of the respondents would forego more than 20%.

0

10

20

30

40

50

60

5-10% 10-15% 15-20% more than 20%


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Table no 4.2.9 - Usage of chit amount regarding to participants

Usage of chit amount No of respondents percentage

Business investment 38 38%

Private property 52 52%

Working capital 0 0%

Business assets 10 10%


Fig no4.2.9

Interpretation:

The above table shows that 52% of the respondents use their chit amount for private

property, 38% of the respondents use for business investment and 10% of the

respondents use for business assets.

38

52

010

Business investment Private property Working capital Business assets


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Table no 4.2.10 - Determine the final bidding amount

Determine the final bidding amount

No of

respondents

Percentage

Calculate the interest rate from the outside

option and then decide the bidding amount16 16%

Depends on the rate of return from the project

for which the prized money will be used24 24%

Both of the above 56 56%

Others 4 4%

Source: primary data Table no4.2.10

Fig no4.2.10

INTERPRETATION:

The above table shows that 16% of the respondents determine their final bidding by

calculating the interest rate from the from the outside option , 24% of the respondents

determine their final bidding on the rate of return from the project and 56% of

respondents determine final bidding by using both options. And 4% of the respondentsare others.

16%

24%56%

4%

Chart Title

Calculate the interest rate

from the outside option andthen decide the bidding

amount

Depends on the rate of

return from the project for

which the prized money will

be used

Both of the above

Others


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Table no 4.2.11 Advantages of chit funds for investing

Advantages of chit funds No of respondents percentage

Money is easily & quickly available 67 67%

The profit distributed as dividend14 14%

Interest is low 5 5%

Easy membership14 14%

Source: primary data Table no4.2.11

Fig no4.2.11

Money is easily & quickly available

Repayment in easy installments

The profit distributed as dividend

Interest is low

Interpretation:

The table shows that 67% of respondents opinion for advantage of chit fund is money

is easy and quickly available by this it is known that maximum no of respondents felt

advantage as it is easy and quickly available.5% of the respondents opinion is interest

rate is very low.by this it is known that they feel it is advantage because of low interest

rate.

14%

14%

67%


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46

Table no 4.2.12 OPINION OF THE RESPONDENT ABOUT THESECURITY OF INVESTMENT

Secure in chit fundsNo of respondents percentage

Not sure 33 33%

Not at all but I feel its a need46 46%

Moderate 21 21%

High secure 0 0%


Fig no4.2.12

Interpretation:

The above table shows that 46% of the respondents felt secure in chit funds because

of need, 33% of the respondents are not sure of security and 21% felt secure in chit

funds as it is moderate.

Not sure

Not at all but I

feel its a need

Moderate

High secure


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Chapter5

SUMMARY OF FINDINGS AND SUGGESTIONS AND

RECOMMENDATIONS


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48

5.1Findings:

Neeladri chit funds covered under chit fund act 1982.

According to analysis, male members are preferred to investing more in chit

funds.

The company runs the minimum chit amount is 1 lakh and maximum chit

amount is 25 lakhs.

According to analysis they preferred most in savings account.

Self-employed persons and business persons are investing more in these.

There is minimum of 5% of the bid amount to be foregone by the subscriber

and the subscriber cannot go beyond 30%.

Majority of respondents are working like farmers and self- employment and their

income Rs.1 lakh below per annum.

Money is easily and quickly available in the chit fund.

Opinion of the respondents about the security of investment not at all, but they

feel it is a need.

Usage of chit amount regarding to participants mainly used for private property

Performance of the respondent regarding the level of bidding between 2ndand

10thmonth.

Friends are the main Influential factor to participate in the chit funds


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5.2 Suggestions:

Many investors are found to invest during the fall in stock market. So it is

suggested the Neeladri chit funds can capitalize and extend its customer base.

Even though, there is a company profile in product like investments, insurance,

loans, and stock broking, most of the customers are willing to invest the money

in the mutual funds because of getting high returns. The company may derive

more satisfaction to their investors.

The company can introduce more schemes, thus making the company more

attractive or beneficial to the members5.3 Conclusion:

The project study makes a deep study on the chit fund industry and the responses of

foreman and its subscribers. The project covers the aspect of customer awareness

and preferences towards chit funds. The legal framework governing the Chit business,

and the responses of the members of the Chit Business to know the attitude of the

customers towards customer awareness in chit funds and customer perception

measurement.


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BIBLIOGRAPHY

The chit fund act, 1982 M/s vijaya Lakshmi publications

Business finance

Financial Management

P.N. Reddy, H.R. Appannaiah, B.G. Sathyaprasad; Himalaya Publication

House.

Finance and Profits

N.J. Yasaswy ; Vision Books Pvt. Ltd.

WEBSITES:

www.mbainfoline.com

www.business.mapsofindia.com

www.aiacf.com

www.ssijmar.in

www.ijrmbs.com
http://www.mbainfoline.com/http://www.business.mapsofindia.com/http://www.aiacf.com/http://www.ssijmar.in/http://www.ijrmbs.com/http://www.ijrmbs.com/http://www.ssijmar.in/http://www.aiacf.com/http://www.business.mapsofindia.com/http://www.mbainfoline.com/


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APPENDEX

Questionnaire on customer awareness and preferences towards chit

funds with reference to Neeladri chit fund private limited company

1. Name:

2. Gender:

A) Male B) Female

3. Age:

A) 1825 years B) 2540 years C) 4060 years D) Above 60

years

4. Location:

5. Qualification:

A) Illiterate B) Up to SSC C) Up to Graduate

D) Up to post Graduate E) Ph.D.

6. You belong to which one of the following category:

A) Govt. Employee B) professional C) Pvt. Firm Employee D) self

Employed E) Business person F) Agriculturist G) others

7. Your annual income is in the range of:

A) Below Rs. 1 lakh B) Between 1 lakh to 2 lakh C) Between 2 lakh to 3

lakh

E) Between 3 lakh to 4 lakh F) Between 4 lakh to 5 lakh G) Above Rs. 5 lakh

8. Where do you invest your savings most?

A) Savings bank B) Fixed deposit C) Shares/Debentures D) postal savings

E) Chit funds F) Insurance G) Others9. Do you have awareness of chit funds?

A) Yes B) No

If yes, then

10. Primary goal of your investment?

A) Education B) House C) Retirement benefit D) Others

11. Who introduced you initially to chit schemes?

A) Family B) Friends C) Business partners D) Chit agents

E) Others


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12. Since when you a member in chit funds?

A) 1-2 yrs. B) 2-3 yrs. C) 3-5 yrs. D) 5-10 yrs. E) 10 or above

13. In which chit group are you a member?

A) 1 lakh B) 5 lakhs C) 10 lakhs D) 10 lakhs above

14. When do you normally bid for the chit?

A) Between 2ndto 10thmonth B) Between 11thto 20thmonth

C) Between 21stto 30thmonth D) As need arises

15. What is the maximum percentage you would forego?

A) 5-10% B) 10-15% C) 15-20% D) 20% more than

16. For what purpose do you use chit amount?

A) Business investment B) Private property

C) Working capital D) Business assets

17. How do you determine the final bidding amount?

A) Calculate the interest rate from the outside option and then decide the bidding

amount

B) Depends on the rate of return from the project for which the prized money will be

used

C) Both of the above

D Other (specify

18. What according to you are the advantages of chit fund?

A) Money is easily & quickly available B) Repayment in easy installments

C) The profit distributed as dividend D) Interest is low

E) Easy membership

19. How secure do you feel in chit funds?A) Not sure B) Not at all but I feel its a need C) Moderate D) High

secure

20. Did you hear about Neeladri chit funds in Hyderabad?

A) Yes B) No

final project(gayatri).pdf

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