Keralite Women’s Collective Finance in South India

Kerala has had a long legacy of self-help groups and cooperatives, from the 1800s in the British Raj to modern-day India. In the 1990s, various self-help-group movements emerged and spread throughout the landscape in an unimagined momentum to reach financially excluded poor women. Affirmative actions by governments played a significant role in all these developments, as conscious efforts were taken to intervene in financial markets. One good example is Kudumbashree, where an anti-poverty and women-empowerment program was implemented by the State Poverty Eradication Mission of the Government of Kerala. Conscientious, progressive government policies engaged women’s groups to rethink formal finance. Tracing the timeline, however, shows that this is not the first such event in the regional economy. Chit funds are the indigenous rotating savings and credit associations (ROSCAs), and were widely prevalent in all the cultural milieu of society, cutting across caste, religion, economic class, and gender, thus penetrating deeply into the minds and hearts of the people. However, with the rise of ROSCAs during an era of modernization came serious challenges, with new issues of defaults and corruption. People’s power, coupled with local democratic movements, forced the state governments to take up the self-help-group cause and to regulate ROSCAs in the formal economy. In this paper, the whole evolution from informal collectives called Chit to formal Chit banks is tracked. This formalization of ROSCAs protects the users and sends a powerful message that ROSCAs belong side-by-side with diverse financial systems.