Chitty Loan
  Consumer/Vehicle Loan
  KSFE Personal Loan
  Gold Loan
  Passbook Loan
  Trade Finance
  KSFE Housing Loan
  Sugama Deposit
  Fixed Deposit
  Car Loan
  Flexy Trade Loan
  Sugama Security Scheme
  Deposit-in-Trust Scheme
  Safe Deposit Locker
  Tax Planning Loan Scheme
  Western Union Money Transfer
  Securities Acceptable
  Interest Rates at a glance
 W e l c o m e   t o   K S F E ...........Govt. of Kerala Owned Miscellaneous Non-Banking Company



$ Better Returns to Investors.
$ Lowest Cost to borrowers.
$ Easy liquidity through advances under Pass Book Loan (PBL),
...New Chitty Loan (NCL) schemes.
$ CSDT- facility.
$ Investor protection through Chitty Act.
$ Public trust, credit worthiness and branch network.
$ Door collection and service of agents.
$ Acceptance of gold as security and wide array of securities.
$ Convenient duration and subscription amount.
$ Easy and transparent operation & inter branch facility


Break even point in chitty - Interest v/s Discount foregone

Bidding Thump Rule :-

No:1 [As a borrower]
Bid the chitty at the maximum rate, since cost of chitty is always much less than the borrowing cost.

No.2 [As an Investor] In the continuous bidding process, if the discount foregone/available on each month is less than or equal to the proportionate of the gross /maximum discount for the month, bid the ticket immediately and invest the proceeds in CSDT or other secured investment/deposits.

Tips :-

I. Per unit (in % terms) of discount foregone correspond to interest earned on the prize money should be arrived to maximize the return from chitty.

II. Discount forgone in auction should be suitably compensated with the interest/return earned by prize money receipt during the course of the chitty.

* Cash flow based computation :- (for investors)

Ex : - [ Rs 2000 X 50 months = sala (Rs) 100000]

i) If the chitty is auctioned at the 18th month \ instalment at a total discount of 11%. prize money payable is 100000-11000= Rs 89000.

ii) Interest accrued on PM deposit for the balance period of (50-19) = 31 months @ 10%.
Therefore total interest for Rs 89000 @ 10% for 31 months is = Rs 23733.

Total prize money at the end of chitty Rs 89000.

Total receipt/ inflow from chitty = 23733+ 89000 = Rs 112733

iii) If the total dividend earned is Rs 6000 during the entire chitty period,
The net outflow of the chitty is Rs100000 - 6000 = Rs 94000.

IV) Net Surplus in chitty Rs 112733 - 94000 = 18733

iv) Annualised average return = Rs 18733 / 50 = Rs 375.

v) Inflow based annual average return: 375/1625 *100 = 23%

Annualised Return (%) = 375/2000* 100 = 18.75% (without considering reinvestment or compounding effect and returns is worked out on gross subscription amount instead of net investment/subscription).

Comparative result of a post-office R.D Scheme

[ 5 year scheme (60 Months duration) at a monthly investment of Rs 150]

Total contribution/ investment =150*60 = 9000.
.............................Total interest earned = 2227
........................................Total inflow = 11227

Inflow based annual average return = 2227/60 = 37

Annualized average Return % = 37 / 150 *100 = 24.5%
Note:- Here the return is high since the matching investment period selected is lower in the case of chit scheme ie, we took only 50 months duration in chitty. If chitty duration is 60 months the return will further jump to a higher percentage level )


i) If the chitty is auctioned at the 18th month/ instalment at a total discount of 5. 5% (including F. C), then the prize money payable is [Rs 100000 - 5500 = Rs 94500].

ii) Interest accrued on PM deposit for the balance period of [50-19] = 31 months. Therefore total interest for prize money for the balance duration of the chitty @ 10% is = Rs 24412.

iii) Total inflow from the chitty (i) + (ii) above = 94500 + 24412 = 118912.

iv) If the dividend earned in the chitty is very less ie, only to an extend of Rs 5000. Therefore, net outflow of the chitty is Rs 100000 - 5000 = 95000.

v) Net surplus in the chitty is (iii) - (iv) = Rs 118912 - Rs 95000 = Rs 23912.

vi) Annualised average return in the chitty is 23912/50 = 478.

vii) Return (%) = 478/2000*100 = 23. 9%

Chitty as a Loan Product

Cost of Chitty :- [Loan V/s Chitty]

i) Chitty Rs 2000 X 50 months = Rs 100000

ii) If the chitty is auctioned at maximum rate the cost is Rs 30000 for 50 months.
Hence, annualized cost is = 30000/50*12=7200 = 7. 2 %

iii) If there is an auction discount of Rs 6000 accrued for the entire course of chitty .
Net cost of chitty is = Rs 30000 - 6000 = 24000
Hence annualized cost /year = 24000/50000*12 = 5.76 %.

iv) Cost of funds will further come down, if duration of chitty is higher at 60 to 100 months duration. Hence, for long term borrowings chitty is most attractive/preferred source/route.


$ Chitty can be used as a best medium of savings for all types of individuals, traders, business class, self- employed persons, etc and any desired asset/portfolio can be created within the duration of the chitty.

$ Chitty can be best used as a low-cost source of fund by all individuals, compared to any other source of funds/ loans in the debt market.

$ All future financial requirements / objectives can easily be planned and met through chitty.

$ Traders can use chit funds as the cheapest cost of funds for commercial use and net outflow in chitty is a deductible business expenditure as per Indian tax laws.

$ Chitty can be used as a medium of investment. The prize money can be utilized for other investment/productive purposes.

$ Effect of inflation will be almost zero in chitty as the corpus of the chitty is received back well before the termination date of the chitty compared to any other banking/financial products.

$ Tenure/duration and denomination is flexible in chitty scheme.

$ Enrollment in chitty of appropriate duration / time span ensures fulfilling each of the future financial needs/objective such as House Construction / acquiring immovable properties, vehicles, furniture, house-hold equipments, foreign tours, marriage of daughters, children's education, retirement planning, hospitalization/treatment cost etc.

$ Tax planning can be made through chitty.

* The calculations shown in this sheet are based on situations usually observed in the conduct of KSFE chitties. There can be variations under actual circumstances.

©Copyright 2003,KSFE. Designed and Maintained by C-DIT,