The Kerala State Financial Enterprises (KSFE) is a government-owned personal finance company, headquartered in Thrissur. The company accepts deposits, disburses loans in various segments like housing finance, automobiles, trade and personal loans. One of the most lucrative savings schemes advertised by the firm, and in fact the backbone of the organization, is chitties, of which each branch maintains a lot of schemes. The terms and conditions of the institution in disbursing prized chits are so cumbersome that most of the people prefer to deposit the money in KSFE itself till the tenure of the chitty is over. Recently, I had the opportunity to inspect the chitty passbooks of two chitties of KSFE. The inference is interesting and outrageous at the same instant.
1. Chit No. 12/09, Prize: Rs. 50,000, Instalments: 25, Amount: Rs. 2,000, KSFE’s Commission: 5%
Instalment | Amount Paid (Rs.) | Cumulative (Rs.) |
1 | 2000 | 2000 |
2 | 1858 | 3858 |
3 | 1810 | 5668 |
4 | 1858 | 7526 |
5 | 1848 | 9374 |
6 | 1894 | 11268 |
7 | 2000 | 13268 |
8 | 1940 | 15208 |
9 | 1932 | 17140 |
10 | 2000 | 19140 |
11 | 1952 | 21092 |
12 | 1958 | 23050 |
13 | 1946 | 24996 |
14 | 1956 | 26952 |
15 | 1970 | 28922 |
16 | 1976 | 30898 |
17 | 1974 | 32872 |
18 | 1980 | 34852 |
19 | 1998 | 36850 |
20 | 2000 | 38850 |
21 | 2000 | 40850 |
22 | 2000 | 42850 |
23 | 2000 | 44850 |
24 | 2000 | 46850 |
25 | 2000 | 48850 |
The depositor can only get 95% of the chitty amount, deducting KSFE’s 5% commission. In this case, it comes to Rs. 47,500, whereas he has already paid Rs. 48,850! This means that the company robs the unsuspecting depositor of Rs. 1,350.
I thought this specific case to be an exception rather than the rule and looked into another chitty of a larger amount. Here, Prize: Rs. 1,00,000, Instalments: 25, Amount: Rs. 4,000, KSFE’s Commission: 5%
The passbook runs as follows
Instalment | Amount Paid (Rs.) | Cumulative (Rs.) |
1 | 4000 | 4000 |
2 | 3960 | 7960 |
3 | 3820 | 11780 |
4 | 3800 | 15580 |
5 | 3748 | 19328 |
6 | 3744 | 23072 |
7 | 3740 | 26812 |
8 | 3796 | 30608 |
9 | 3794 | 34402 |
10 | 3796 | 38198 |
11 | 3812 | 42010 |
12 | 3850 | 45860 |
13 | 4000 | 49860 |
14 | 3996 | 53856 |
15 | 3920 | 57776 |
16 | 4000 | 61776 |
17 | 4000 | 65776 |
18 | 4000 | 69776 |
19 | 4000 | 73776 |
20 | 3956 | 77732 |
21 | 3988 | 81720 |
22 | 3996 | 85716 |
23 | 4000 | 89716 |
24 | 4000 | 93716 |
25 | 4000 | 97716 |
Here, the amount receivable is Rs. 95,000 only, while the company collected Rs. 97,716, pocketing Rs. 2,716 of the depositor’s hard-earned money!
Let’s now compare the yield of other deposit schemes. We take three cases
1. KSFE chitty (our present issue)2. Recurring deposit in a bank @ 9% interest and quarterly compounding
3. Iron box deposit (simply put the money in an iron box underneath your bed!)
| Option | Amount obtainable after 25 months |
| KSFE | 47,500 |
| Recurring deposit | 54,732 |
| Iron box deposit | 50,000 |
Even the iron box deposit yields 5.36% more than KSFE!
