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Kerala's new savings scheme to be Shariah-compliant in 3 months

Dubai - Since the launch of its registrations in June this year, a total of 150,000 leads have been generated on the online platform.

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Kerala government's savings scheme, 'KSFE Pravasi Chitty' will be 100 per cent Shariah compliant in a matter of three months, announced the state's finance minister Dr T.M. Thomas Isaac. The Kerala State Financial Enterprises (KSFE) savings (chit) fund, a first-of-its-kind fully online operated financial service, will officially launch in the UAE towards the end of August or first week of September. The official launch date in the UAE depends on Kerala Chief Minister Pinarayi Vijayan's time and availability. The chief minister may visit the UAE to launch the scheme, said Dr Isaac.
The minister, along with Dr PV Unnikrishnan, a director of the KSFE, addressed members of the UAE media via video conference on Tuesday. Since the launch of its registrations in June this year, a total of 150,000 leads have been generated on the online platform. "Of these, 6,000 have already subscribed to the service. By its launch in August-September, we are looking at a total of 30,000 registrations," announced Isaac.

Shariah compliant 

A chit fund is a savings scheme where a group of subscribers invest a certain sum of money every month for a specified period. Each month the subscribers, by turn, are entitled to a prize amount. The minister said: "Investments from the chit fund would only be used towards long-term infrastructural development projects in Kerala, such as roads and cultural complexes." 
Furthermore, even though traditional chit funds do not have the concept of interest, there is an element of speculation in the fact that each month there is an auction from which a subscriber receives the cash. 
"For the Pravasi chit fund, there will be no interest and no auctions. Groups will be formed, and the chit would be given to an individual, depending on a need basis," he said, making the chit a Shariah-compliant financial instrument. 
The minister also confirmed that he would visit the UAE in the first week of August to finalise details about the chit fund, including an official launch date. "The scheme is a very ambitious project, and we have worked to develop the sophisticated chit software for an entire year," he said. 
Dr Isaac also said that monthly instalments for the chit could be directly debited from subscribers' NRI bank account. Investors can also send the instalment through exchanges in the UAE, hopefully for a very minimal service charge. "We are in talks with exchanges and requested them to keep the service charge to a minimal amount of Dh5," added the minister. 
As for chit prize winners who need to place financial savings or property guarantee after winning the prize, Dr Isaac said: "Users can upload property ownership documents, bank fixed deposit (FD) documents, and proof of gold ownership on the portal. The KSFE staff will verify the documents in two weeks, after which prize money would be released." 

Ironing-out issues 

Glitches such as the non-availability of the chit fund's app on an iOS platform, the lack of a regional help centre, issues with the generation of a one-time password (OTP) and the slow functioning of the app are currently being fixed, said the minister. "The scheme is still in its teething stages. However, we are looking to ease out all issues before the final launch," he added. 
At present, all subscribers need to have a mandatory membership to the Department of Non-Resident Keralites Affairs (Norka) if they want to become part of the chit scheme. The minister confirmed this too would be reversed. 
The centre has also launched a 24/7 call centre with 35 employees in Thiruvananthapuram to provide virtual assistance to subscribers. However, the minister also confirmed that an NRI chit fund liaison office in the UAE is also in the works. Dr PV Unnikrishnan said: "Almost 30 per cent of the subscribers have issues while receiving a one-time password. People will now receive the OTP through WhatsApp. Enquiries and doubts can also be cleared on all social media platforms."
dhanusha@khaleejtimes.com