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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.
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.
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.
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.
KSEF Pravasi Chit Fund offers several additional benefits such as:
Ans: No, all transactions and functions related to the KSEF Pravasi Chit Fund are conducted online on a secure platform.
Ans: Anyone NRK older than 18 years of age can participate in the KSEF Pravasi Chit Fund schemes.
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.
Ans: No, payments for KSEF Pravasi Chit Fund schemes are only accepted in the Indian National Rupee.
Ans: Kerala Pravasi Welfare Boards offers and oversees the pension scheme part of the KSEF Pravasi Chit Fund.
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.
Ans: Yes, you can add as many nominees as you like in any KSEF Pravasi Chit Fund scheme.
Ans: An auction discount of 30% is applicable on KSEF Pravasi Chit Fund prize amounts.