A chit fund is a type of rotating savings and credit association system practiced in India, Bangladesh, Sri Lanka, Pakistan and other Asian countries. Chit fund schemes may be organized by financial institutions, or informally among friends, relatives, or neighbours. In some variations of chit funds, the savings are for a specific purpose. Chit funds are often microfinance organizations. History The chit fund is said to be an institution that has been handed down since ancient times. In 1887, William Logan, erstwhile Collector of the Malabar district of the Madras Presidency, described the custom of chit funds among friend groups in that region. In 1894, economic historian Edith Simcox mentioned that chit fund lotteries were used to raise money for special events like weddings in South India. Various reports in the 1930s point to the popularity of chit funds in current-day Kerala. In the 1930s and 1940s, between 1000 and 10,000 formal funds functioned in the state every year. Chit funds went through several stages of overlapping formalization in the 20th century. The organizer became more active in soliciting funds for the fund and merchants and salaried workers, not just farmers, had also begun to participate. Institutional organizers including partnerships, limited liability firms, co-operatives and joint-stock banks entered the business. During the 1930s, 166 banks were conducting chit funds in Kerala. The first state-run chit fund, Kerala State Financial Enterprises, was established in 1969 by the Kerala government. Its explicit purpose was to provide an alternative to unscrupulous private-sector chit fund organizers. In 2000, it had 77% of the capital volume of the chit fund business in Kerala, though just 37.5% of the number of chit funds. By 2012, it has grown to serve 2.5 million customers with Rs 14,646 crore in annual business. Due to the rigid provisions of the 1975 Kerala Chitties Act, many fund organizers moved to other states and started operating there. Private chit funds declined significantly in Kerala as a result. In the 1990s, several chit-fund-like investment options were developed that technically fall outside of the chit fund regulations Large chit funds for corporate needs have also been developed in the 1990s. The Model Chit Corporation in Hyderabad introduced a Rs 1 crore chit fund for the first time in August 1995. Geographic distribution In urban areas of Tamil Nadu, Karnataka, Andhra Pradesh, Kerala, 5 to 10% of households participate in registered chit funds. As