KSFE Pravasi Chit Fund for NRKs in the UAE

Chit funds are embedded in the very roots of the local investment systems of many countries. One such country is India. Chit funds started in India over a thousand years ago. Many amendments have been made since then to regularize this investment option to make it safe for the participants. The government made its first attempt to regularize chit funds in the year 1914 after it was banned for a while due to rampant scams. After several years of formalizations and regulations, chit funds are back to being one of the most preferred investment options for southern India. Many private and government organizations now offer chit fund schemes as investment options for interested investors. KSFE Pravasi Chit Fund is one such organization. 

What is KSFE Pravasi Chit Fund? 

Kerela State Financial Enterprise or KSFE Pravasi Chit Fund is a state-run chit fund organisation monitored and run by the government of Kerala. It was introduced as a welfare scheme for non-resident Malayalees living abroad. It works as any other generic chit funds do with a few tweaks and tricks setting it apart from the rest of generic chit funds found in India. KSFE Pravasi Chit Fund is exclusively made for NRKs and can be accessed easily using digital platforms monitored by KSFE. This chit fund was established in the year 1969 after the inception of the Tamil Nadu Chit Fund Act of 1961. 

How Do Chit Funds Work?

A chit fund is an investment scheme where a bunch of investors come together and pool in their individual share to fulfil a common goal which is return on investment and security in most cases. Everyone who participates in a chit fund is assured to get returns on their investment however ROIs may differ for each participant. The tenure of a chit fund is equal to the number of members participating in it. Let’s understand this with an example. A chit fund is organized with 10 members. This chit will run for 10 months. Each member has to contribute INR 1000 every month. Once a corpus is built for the month, the organizer of the chit fund calls for an auction. Anyone who needs money in that particular month can take part in the auction. This auction bids for the highest discount. The person who bids to give the highest discount wins the prize money for the month. For example, Mr Y bids a winning discount of 25%. He will receive Rs. 7,500 (Rs. 10,000 – Rs. 2,500 (25% discount)). The discounted amount is then distributed among the rest of the members after subtracting the organiser’s fee. 

If none of the member participates in the auction for a particular month, the prize is given away using a lottery system. The minimum set discount for the chit will still apply to the prize money. Once again, the discounted amount is distributed among the rest of the members after deducting the organiser’s fee. Once a person wins auction prize money or lottery prize money during the chit tenure, they cannot participate in further auctions or lotteries. However, they will have to continue paying their share of the chit investment amount every month until the chit ends after 10 months, in this case. 

How is KSFE Pravasi Chit Fund Different from Generic Chit Funds?

In addition to being a chit fund, KSEF Pravasi Chit Fund also offers added benefits like insurance coverage and pension/retirement plans. The registered participants taking part in a chit can opt for these benefits whenever they like and build a corpus for their retirement fund while taking part in regular chit fund auctions. KSEF Pravasi Chit Fund also offers a liability waiver feature to be used upon the untimely demise of a paid subscriber. Liability amounts of up to INR 10 Lakhs can be waived off when a person opts for the liability waiver option. 

Features and Benefits of KSEF Pravasi Chit Fund

KSEF Pravasi Chit Fund offers several additional benefits such as: 

  • Online Auction Room: All chit fund scheme auctions of KSEF Pravasi Chit Fund are held online on a secure platform. Every auction is 30 minutes long where the interested bidders can bid their auction discount. The highest discount wins the prize money. To maintain transparency, the prize money won as well as the name of the winner is displayed on the auction screen. 
  • Easy Online Payments: The participating members of a chit can easily pay their monthly investment share using any of the available online payment methods. Debit cards, credit cards and other popular payment methods are available for you to have your pick. 
  • Multiple Chittals for One Subscriber: One paid subscriber is free to hold up to 10% of the total available chital numbers in any chit scheme of KSEF Pravasi Chit Fund. The subscribers have to pay investment portion for all the chittal numbers they hold. 
  • Customer Support: A dedicated customer support centre is always available to ensure that members aren’t faced with glitches. You can get in touch with customer support using the online contact centre or even other apps like WhatsApp. 
  • Security Process for Deposits: The winner of the lottery or the auction in a running chit can choose to deposit their prize money with KSEF Pravasi Chit Fund. The deposited amount is generally invested in projects running for the welfare of Kerala public services with a guarantee of return from the government. This way, your prize money is not only stay safe but also helps in the welfare of the community. It can be withdrawn at the end of the chit or before, whenever you like. 
  • Liability Waiver: An option of liability waiver is provided to address cases of untimely deaths of the subscribers who have not only won the prize money once in the chit but have also been paid. Winning amounts up to INR 10 Lakhs are waived off in such cases. If security has been deposited INR 10 Lakhs, it is returned as well. 
  • Pension Scheme: Subscribers of KSEF Pravasi Chit Fund can also opt for a free pension scheme to build a corpus for their retirement. The interested subscribers taking part in the pension scheme are to pay a small premium every month ranging from Rs. 300-400. Pension is offered to the subscribers upon maturity. 
  • Multiple Chits to Choose From: The available chits running at the moment with the KSEF Pravasi Chit Fund range from Rs. 2,500 to Rs. 1,25,000. The tenure of the chits ranges from 25 months to 60 months. Subscribers can easily have their pick. 

Eligibility Criteria for KSEF Pravasi Chit Fund

  • All NRKs living in or outside of India are eligible to get registered with KSEF Pravasi Chit Fund.
  • Documents required for NRKs outside India:
    • Passport
    • Resident’s Visa
    • The national ID of the country of residence or labour ID (i.e., the Emirates ID for UAE residents from Kerala)
    • Passport-sized photograph

KSEF Pravasi Chit Fund FAQs

Q1: Is KSEF Pravasi Chit Fund available offline?

Ans: No, all transactions and functions related to the KSEF Pravasi Chit Fund are conducted online on a secure platform. 

Q2: What is the age limit of participating in KSEF Pravasi Chit Fund schemes?

Ans: Anyone NRK older than 18 years of age can participate in the KSEF Pravasi Chit Fund schemes. 

Q3: What do you mean by Chittal Number?

Ans: A chittal number is a unique number from a chit that is given to each participating subscriber. This becomes the unique identification of the subscriber in the concerned chit. A subscriber can buy more than one chittal numbers. 

Q4: Can I make payments in foreign currencies for KSEF Pravasi Chit Fund schemes?

Ans: No, payments for KSEF Pravasi Chit Fund schemes are only accepted in the Indian National Rupee. 

Q5: Who oversees the pension scheme part of the KSEF Pravasi Chit Fund?

Ans: Kerala Pravasi Welfare Boards offers and oversees the pension scheme part of the KSEF Pravasi Chit Fund. 

Q6: Can a subscriber hold more than one chital number in a chit? What is the maximum limit here?

Ans: Yes, a paid subscriber of the KSEF Pravasi Chit Fund can hold up to 10% of the total chitals available in a particular chit scheme. For example, if a chit scheme has a total of 50 chittals, one paid subscriber can have up to 5 chittals. They will have to contribute to each of the 5 chittals separately though. 

Q7: Is it possible to add multiple nominees in a KSEF Pravasi Chit?

Ans: Yes, you can add as many nominees as you like in any KSEF Pravasi Chit Fund scheme. 

Q8: Is there an auction discount in KSEF Pravasi Chit Fund schemes?

Ans:  An auction discount of 30% is applicable on KSEF Pravasi Chit Fund prize amounts.

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