Chit fund is a personal loan and a recurring deposit rolled into one. A chit fund means many things to many people. For someone seeking a loan in a convenient manner, for the small saver, it is an option that enforces monthly investment discipline. Founded in 2016, Chit Monks, a Hyderabad-based startup extends its services to chit fund companies of any size and anywhere in India, by digitally enabling them with the process efficiency, better underwriting and making their offerings more inclusive. The founders of ChitMonks talk to The Hans India about the startup and several aspects related to chit funds. Excerpts

How is Chit Monks different from other chit fund companies?

We are not a chit fund company; we are technology providers to the companies. We do not operate like chit fund companies. We offer unique benefits. Chit Monks is a neutral platform to promote chit fund companies. Through us, one can enrol faster in a chit group. As the information is stored on the cloud, a subscriber can access all their chit groups' information anytime and anywhere. It helps them manage and check their interest rates according to their cost of opportunity, essentially allowing them to handle the interest rates. In addition, they get expert advice on how to manage a chit portfolio.

What is it like being a technology partner for the All-India Chit Fund association?

Initially, we spent time on building trust with the industry and have started consulting for them at times. The association wants to regulate the firms. We build the technology for them, while the data is owned by them. We monitor the tech part, its where Chit Monks is playing a role as a technology partner. Having connections is fine, but being a tech partner is altogether different and a serious business.

Chit funds business is unstructured in India. What was the big challenge you faced as a startup company?

The biggest challenge was to convince people that this is a marketplace for all and they trust us. Companies love the concept but want us to do it only for them. Convincing the companies that this is a neutral marketplace was challenging. Chit Monks is a discovery platform. We do not shift the subscriber from one company to another. We explain the scenarios and educate the subscriber continuously based on the chit performance. Secondly, a big challenge was with banks giving payment gateway solutions for the industry. We finally got the approval of one of the biggest banks and went live with their PG solution, which involves UPI based payments for the first time ever in the chit fund industry.

How is Chit Monks revamping the traditional funding process?

People tend to withdraw money only after completion of the chit due to lack of awareness. But we guide our customers when to participate in auctioning based on their financial needs. Generally, companies do not have a customer transaction history. The liability is left to the branch manager who takes the final decision because we are in either a cash economy or low cash economy scenario. There are multiple sources from where a person gets money. Consequently, his/her creditworthiness may not be reflecting in the books. For existing users, we build their credit history. We are coming up with future models where the group lending space can be reimagined.

Lot of effort would have gone into your startup. Why do you think it failed? Is it due to some lacunae in government policies or not being able to find the right clients or manpower to execute your dreams?

We don't believe that a start up's success depends upon government policies. There are a few products that are related to their policies. These policies can help them sustain for a longer time but a start up's success depends upon the company, its product and how they are executing it. Currently, the government is talking of involving startups in their operations such as seeking help from startups to find some ambitious solutions. Especially in Telangana, the State government is proactive in terms of seeking solutions from startups and we have been benefited by that. The products we've designed and developed are being used by the State government. If a startup suggests a solution, the government may take it if it is viable.

Tell us about ChitPe, ChitInsure, and Chit Funds 2.0?

Chit Funds 2.0 will bring other entities like banks and financial institutions onto the platform in order to serve the chit fund firms. With this platform, we want to make the chit fund companies digital ready and it will prove to be extremely useful at a time when offline relations are going online.

ChitPe, which is live and running, is an online collection platform wherein chit fund companies and customers can simply pay their dues and keep track of their payments in a simple and hassle-free manner using UPI through the platform. Customers can access payments through any platforms and for the chit fund companies it is a one-stop platform to keep track of their customers' payments among other things.

C hitInsure is specially designed to protect the subscribers. This solution offers two products– one that helps companies in providing additional security for new subscriptions and the other to protect the future liabilities of the subscribers.

Why the percentage of startups failing is high? What is your observation and what do you suggest to see the success rate increase drastically?

How can we make the success rate of a start-up better is a tough question, because it depends on the innovator, whether one is innovative in the process or either the process to make solutions better or find new products.

When one invents a product, the success depends on whether the product has demand in the market or not. One has to think about the market size of the product. After identifying the market size, one has to do a market survey. The entire story should revolve around making a product in such a way that you have the gross margin on the sale price of the product.

These days the bigger challenge for startups is running behind valuation; creating value on paper, say 300 million subscribers or more; it might work well for some businesses such as WhatsApp or Facebook but not for all startups. It is better the founder realises why the numbers are not adding up, sooner, so that they can work on alternative fixes. The reality check is important. They need to work on that, build a business where there is scale and money, if that is not happening, the customer loyalty is gone. It's easier said than done.