Chit Funds: New Way of Expanding Reach for Insurance Firms
“As of now we’re managing our fee-based business (which include sale of mutual funds, insurance and housing loan products) from a different company. We’ll be able to distribute mutual funds and indurance products better, and leverage on our strong client database to increase business,” adds Sivaramakrishnan.
The chit schemes of a chit fund house are pre-determined value and duration. Each scheme admits a particular number of members which is in most cases equal to the duration of the scheme. They put in a certain sum of money every month to the 'pot' and this 'pot' is then auctioned out every month.
“Chit funds are moving in the right direction by diversifying their business. They have to impart training (on financial products) to their agents before they go full steam,” said B Shivalingappa, Promoter of MCI Bangalore Chits, as quoted by ET.
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