An Indian crypto startup raised $650K in a pre-series A round with the help of investors Unicorn India Ventures in order to bring “Chit Fund” on the blockchain as we are reading further in the blockchain news.
The firm wants to revolutionize proceedings by bringing 21st-century blockchain technology to the chit-fund market:
“At ChitMonks, we are building India’s largest blockchain network for Savings and Borrowings. We synergize Chit Fund Companies, Regulators, Subscribers, Banks, Service providers, EcoSystem enablers to drive the largest trusted network of Savers and Borrowers platform.”
Records of Chit-funds can go back to the 19th century as there is a type of rotating the savings and borrowing facility in the country where the members make contributions each month to build a pot. The open auction determines the lowest bid members to try and take that month. The winning bidder will receive their bid amount from the pot. The remaining pot balance is then distributed among other members without the organizer’s fee. All members contribute again for the next month.
Chit-funds often exist as an informal arrangement between neighbors and friends and a regulatory body does not ensure the funds and risks such as the winning bidders defaulting on the next payment or record-keeping with present challenges to the operation of chit funds. With that, the co-founder and CEO of ChitMonks PAvan Adipuram believe that his firm can reinvent the chit-funds market via the use of crypto technology:
“We believed that such technologies can redefine chit funds and they can re-emerge as a bonafide sector where retail investors can invest and borrow money in a trustless manner.”
ChitMonks developed a crypto powered platform that allows regulators to administer the fund operations onto the blockchain network. The company works with chit fund companies to make their services much more efficient and with the use of the crypto technolgoy, much more trustworthy rather than the traditional records. As a part of their expansion, ChitMonks is rolling out the program to chit funds companies of all sizes across the whole of India.
The India Crypto startup hopes that the advantages they offer such as process efficiency and auctions as well as underwriting capability will modernize the entire chit-fund space. The managing partner at UIV Bhaskar Majmudar commented:
“Even before the current COVID-19 scenario, we saw the potential in ChitMonks to revolutionize the current antiquated system of the chit fund industry by bringing the whole ecosystem online. It is in-line with our philosophy of investing in businesses that can digitize current processes and make them more transparent and accessible.”
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