Telangana and Andhra Pradesh, which enjoy substantial diaspora population, have been keeping tabs on Kerala government’s experiment to garner Rs 10,000 crore this year through a diaspora chit fund. Kerala chief minister Pinarayi Vijayan inaugurated the registration of KSFE Pravasi Chitty here this week. The funds obtained through Pravasi Chitty would be invested in bonds of Kerala Infrastructure and Investment Fund Board (KIIFB), which, in turn, will be utilised for state’s infra-building, Vijayan said. “We intend to go for 10 lakh subscribers in three years,” he added. KSFE (Kerala State Financial Corporation), the chit fund arm of Kerala government, has scheduled its first online payment at a function in UAE in July end.
“Senior officials from Telangana and Andhra Pradesh governments have been making enquiries on how this new financial instrument to tap NRI savings is turning out,” Peelipose Thomas, chairman, KSFE, told FE. “They have been in touch to understand how it works and what are the benefits for NRIs, so that the model could be replicated,” he said. While Telangana had recently earmarked Rs 100 crore for NRI welfare and is in the throes of opening an NRI cell, Andhra Pradesh has a funding system between state and Andhra-born NRIs in North America in 70:30 ratio to build digital classrooms, anganwadis, crematoriums and sports centres.
However, the KSFE Pravasi chit fund in Kerala is not about NRIs funding home-state’s infra projects free. “Kerala government assures that the subscriber’s investment would be secure, with fairly decent yields,” according to TM Thomas Isaac, state finance minister. It would also include pension schemes and insurance in pact with LIC. For Kerala, the benefit is that it would indirectly feed infrastructure development, as it is converted to KIIFB bonds. The Kerala government counts on making good the chit fund subscriber’s investment on non-profit ventures like school infrastructure upgradation, with debt-repayment mechanism, periodically monitored by a panel headed by former C&AG Vinod Rai.
“Modalities are spelt out. Soon, subscribers would get identification number, enabling them to interact online,” KIIFB CEO and former SEBI member KM Abraham said. An advanced online technology platform is in place, enabling the subscriber to participate in online auction from any part of the world, using their identification number. To get the prize money without hassles, the entitled person can authorise a proxy to submit the required documents.
Currently, only those in UAE can be subscribers. The chit fund would target only small and medium income NRIs, with monthly installments in Rs 3,000 to Rs 25,000 range and running to tenures in the range of 30 to 60 months. The chit fund would scale up to target those in `1 crore and above category and to other countries after the first phase is smoothed out. Conscious of its pioneer pitfalls in this process, Kerala government is apparently, taking only small strides.