Promoting chit funds with unique benefits

Chit fund is a personal loan, a recurring deposit rolled into one. A chit fund means many things to many people. For someone seeking a loan in a convenient manner, for the small saver, it is an option that enforces monthly investment discipline.

How is Chit Monks different from other chit fund companies?

We are not a chit fund company; we are technology providers to the companies. We do not operate like chit fund companies. We offer unique benefits. Chit Monks is a neutral platform to promote chit fund companies. Through us, one can enrol faster in a chit group. As the information is stored on the cloud, a subscriber can access all their chit group's information anytime and anywhere. It helps them manage and check their interest rates according to their cost of opportunity, essentially allowing them to handle the interest rates. In addition, they get expert advice on how to manage a chit portfolio.

What is it like being a technology partner for the All-India Chit Fund association?

Our initial time, we spent on building trust with the industry and have grown into doing consulting for them at times. The association wants to regulate the firms. We will build the technology for them, while the data will be owned by them. We will monitor the tech part, where Chit Monks is playing a role as a technology partner. Having contacts is different; being a tech partner is altogether different.

Chit funds business is unstructured in India. What was the big challenge you faced as a start-up company?

The biggest challenge was to convince people that this is a marketplace for all. Companies love the concept but want us to do it only for them. Convincing the companies that this is a neutral marketplace was challenging. Chit Monks is a discovery platform. We do not exchange the subscriber from one company to another. We explain the scenarios and educate the subscriber continuously based on the chit performance. Secondly, a big challenge was with banks giving payment gateway solutions for the industry. We finally got the approval of one of the biggest banks and went live with their PG solution which involves UPI based payments for the first time ever in the chit fund industry.

How is Chit Monks revamping the traditional funding process?

People tend to withdraw money only after completion of the chit due to lack of awareness. But we guide our customers when to participate in auctioning based on their financial needs. Generally, companies do not have a customer transaction history. The liability is left to the branch manager who takes the final decision because we are a cash economy or less cash economy scenario. There are multiple sources from where a person gets money. Consequently, his creditworthiness may not be reflecting in the books. For existing users, we build their credit history. We are coming up with future models where the group lending space can be reimagined.

Lot of effort would have gone into your start up. Why do you think it failed? Is it due to some lacunae in government policies or not being able to find the right clients or manpower to execute your dreams?

We don't believe that a start up's success depends upon government policies. There are a few products which are related to their policies. These policies can help them sustain for a longer time but a start up's success depends upon the company, its product and how they are executing it. Currently, the Government is speaking of involving start-ups into their operations like seeking help from start-ups to ambition some solutions. Especially in Telangana, our state government is proactive in terms of seeking solutions from start-ups and we have been beneficiaries of that. The products we've designed and developed are being used by the state government. If a start-up suggests a solution, the government may take it if it is good.

Tell us about CHITPE, CHITINSURE, and CHIT FUNDS 2.0?

Chit Funds 2.0 will bring other entities like banks and financial institutions onto the platform in order to serve the chit fund firms. With this platform, we want to make the chit fund companies' digital ready and it will prove to be extremely useful at a time when offline relations are all going online.

Chit-Pe, which is live and running, is an online collection platform wherein chit fund companies and customers can simply pay their dues and keep track of their payments in a simple and hassle-free manner using UPI through the platform. Customers can access payments through any platforms and for the chit fund companies it is a one-stop platform to keep track of their customers' payments among other things.

Chit-insure is specially designed to protect the subscribers and offers two products– one that helps companies in providing additional security for new subscriptions and the other to protect the future liabilities of the subscribers.

Why is the percentage of start-ups failing is high? What is your observation and what do you suggest to see that the success rate increases drastically?

How can we make the success rate of a start-up better is a tough question, because it depends on the innovator, whether one is innovative in the process or either the process to make solutions better or find new products.

When one invents a product, the success depends on whether the product has demand in the market or not. One has to think about the market size of the product. After identifying the market size, one has to do a market survey and cost of the price. The entire story should revolve around making a product in such a way that you have the gross margin of the product and sell it to them.

These days the bigger challenges with many start-ups are running behind valuation, there is no under valuation but creating value on paper like excel sheet, saying 300 million subscribers or more, it works in some businesses like WhatsApp or Facebook. Sooner the better, the founder realizes why the numbers are not adding up, they are going to fail. The reality check is important like what business they are behind, what is the addressable market size and if a customer is not willing to pay, they need to work on that. build a business where there is scale and money, if that is not happening, the customer loyalty is gone. It's easier to be said than done.