Friday, October 1, 2010

Traditional micro financial systems of mutual understanding

Micro financial enterprises have grown importance nowadays. These enterprises are highly contributing to rural development in India. The rural working class population in India is in need of a financial support at various situations they face. His daily wage work will not earn him ready cash or left with him that amount to meet the expenses of several functions of his family or any emergency situation. So, in such cases micro financing is always helpful to the rural population. Bangladesh Gramin Bank of the neighboring country is a world famous micro financing institution.

But when we explore rural India, there are various traditional financial systems. 'Kuri or Chitti' is such a system seen in several areas. In this system an amount of money, (ranging from 10 000 to 50 000 usually) is fixed by the person carrying out the system. Then a number of workers (sufficient number to cover the sum total) join this scheme and each has a smaller denomination (mainly 10 percent) to pay in installment each week. Each week the fixed amount is collected and one of the members is selected by lucky draw, who will get that weeks total. He will not be drawn again and has to pay again the installment until all members get the amount. The first week’s amount will go to the person who carries out this business. If anybody is in need of money urgently, they will get next week’s draw if the concerned is contacted. This savings scheme is very helpful for daily wage workers and is even carried out abroad also were large number of Indians work.

In the south Indian state of Kerala, there is a system called 'panappayattu'.It is a system of mutual understanding, which is mainly conducted during occasions which needs a big amount of money. This tradition reflects the helping mentality, Co-operation and the mutual understanding of the rural people. Marriages and house warming are the main occasions where this system is carried out without its name used. The main aim is to meet the expense or to pay debts. A tea party is organized along with the marriage function or house warming function. This party is usually organized the day before the function. And all relatives, neighbors, friends, colleagues are invited for the party. And the guests will contribute an amount, according to his ability and considering the need of the host. All the contributions are entered in a register and kept with the host after the function. The guests are served with tea and snacks. So, the function will be gainful for the host and he may get a sum to meet the expenses at the time. There are occasions in which, good amount of money left after meeting the expenses.

The function turns to co-operation after this. The person who received the financial help will keep the register with him. This person will be invited for similar functions at many of the guest’s residence. They will be also in need of money. This time, the first person contributes the amount he received earlier, or a higher amount considering the need. So, it become like a payment back. This system is so, highly helpful in getting financial support, without usury. Each one is helping his friend, with a thought of getting a help back from him, when needed.

So, what a man will do when he is in need for money and there is no function to be held, may be for a house repair or paying a debt or something like that. He must have given money earlier to his friends on several occasions, and have to get that back. At this time he will conduct a 'panappayattu'. (Word meaning- “fight for money"; I got amazed when first viewed that board, thinking of a fight. Since in our place this practice is called’ kurikalyanam’. The person will conduct a small party in a tea shop at the village bazaar one evening and give invitations to the persons whom he has to get money. To get attraction front of the teashop is decorated with leaves and songs are played over speakers. The invitees will come and contribute (pay back), and they are served with tea and snacks. This makes the practice a financial system of mutual understanding reflecting the brotherhood and co-operation of the typical country side.

"Kuri's and 'Panappayattu' has become rare these days. The number of such functions is very low comparing to a ten year ago, even though at household functions are still continuing. The new age micro financial institutions and money lenders has taken the place to help the people with money, but with a high interest. Kuri's has also become rare, replaced by government run savings programmes, like post office savings, Co-operative banks, etc. These systems may have some advantages over the traditional ones. But they lack the spirit of country side culture. Disappearance of such practices is a big blow to the brotherhood and harmony of the village people.

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