Today there is much talk of Micro Finance systems and many people have rightly decided to throw their lots into it. At meetings, the phrase creates a buzz and many a dignitary now manages Microfinance organizations. Looking back into history, what did we have in South India, particularly Malabar, Cochin and Travancore? Kerala had over many centuries practiced the Kuri system or the Chitti system. But evolving from a noble social purpose, it grew to become a lucrative and unregulated business. Since then a number of chit funds came up and these days, we associate Chit funds often to nefarious & dubious ‘blade’ companies.
It was certainly interesting to trace the beginnings of this system. While the Kuri system itself has very ancient connections to Kavu Tattakam’s and other monetary schools practiced in various primitive civilizations, the system as such was social banking, created for the good of the needy. Later it became institutionalized to develop into large chit funds and eventually became regulated by banking acts.
According to Simcox in her book Primitive civilizations, the ‘Malabar Kuri’ system existed from ancient Dravidian times and is somewhat similar to the systems in China. Eminent historian Dr NM Nampoothiri in his Toponymical work – Legacy of Nila refers to Dr Raghavan’s conclusion that the Village Banking system known as Kuri has its origins from the ‘Kaavu tattakam’ social group system. ‘Kavu tattakam’ refers to the territorial jurisdiction of a ‘kaavu’ or temple to a specific area. There were many such Thattakams and all ‘Kaavu Tattakams’ were finally linked to Zamorin’s Tirunavaya Mamankam.
Having established it as an ancient practice in Kerala (Malabar, Cochin and Travancore) let us take a look at how it evolved. Note here that Travancore manual refers to Kuri as Malabar Kuri whereas others mention Chitty systems as mostly prevalent in Travancore. Is there any difference between Chitty and Kuri? Then there is the ‘Kuri kalyanam’ which still exists in Moslem circles of Malabar. To decide whether it was for social networking, micro banking or neighborhood reciprocity, let us take a look at specifics.
First let us take a look at the standard ‘Kuri” system. It is usually associated with the need by a person to raise a substantial amount on money in a short time, for a specific occasion such as a daughter’s marriage. The organizer or receiver sets up a luncheon or dinner wherein his friends participate by attending and by contributing a certain amount of commodity or money. During this event a second event takes place, lots are drawn to decide the next recipient. This thus functions for a certain period of time by rotation with the only uncertainty being the assurance of returning the money received by receivers. Since the event takes place in a tight community, the rules and regulations are determined by the fraternal relations and compulsions. However note that ‘kuri’ does not have a mandated payment period and the amount returned is the principal without interest. The effect of delayed return or non payment is gross humiliation or loss of face in his society.
This morphed into the modern day Simple or Changatha Kuri –which was based around meetings of friends and here the regular contribution was fixed for each member of such a group. Drawing of Lots decided the recipient from the group who hosted the meeting and dinner, with the Kuri period fixed in advance. The cost of the dinner is supposedly not more than 10% of the collections. Now note here for example that if the Chit period is 25 months, the persons who get drawn in the first lots are the bigger beneficiaries as compared to the one who gets drawn in the later lots e.g. in the 23rd month. The head of the group is called Kuri Moopan and he gets the privilege of being the first to draw the loan and is the proprietor of the system, responsible for the Kuri management and overdue collection.
Writers like Edith Jemma Simcox (Primitive Civilizations) believe that the coupling of this monetary event with a ceremonial eating event may go all the way to ancient Cretan and Carthaginian clubs. It was also found in ancient Babylonia, Egypt and of course China. In China it developed to what is popularly known today as the Chinese lottery.
The Chitty system became a bit more complex - There are usually 4 types of chits observed, the Simple Kuri (as explained previously), the Lelam kuri or auction chit, the Sahaya chit for needy people and the Prize chit or lottery where a certain amount of gambling is involved. There are also grain and cloth chits. After a while, it became necessary for security to be furnished in order to draw the amount on the table as a loan.
In the auction Chitty, the member offering the highest discount gets the chitty. In the Kuri or chitty system you pay back a fixed amount, i.e. the monthly contribution, regularly.
The Moplah Kuri kalyanam is a bit different. Typically conducted among the Moplah’s and Muslim fisher folk in North Malabar, a Kuri kalyanam is an invitation to a feast to which the guest is expected to bring a cash gift. It is also called ‘payattu’ in some parts of Malabar. It is either held in a tea shop, hotel or the portico of the house of the receiver. When the host in his turn is invited to a feast by one of the guests he is expected to return double the amount, or less if he is perceived to be poor. Thari kanji is served and usually some music blares out from loud speakers meant to announce the event held under a pandal with some colored ‘Jamkalams’ lining the sides. The compulsion of repayment was always moral, not legally enforced. In modern times, anybody could attend the feast and pay as he could or wished for the food eaten. The kuri kalyanam was thus a fund raising festival, involving a number of members of the local community. Rajan Venkateswaran explains the actual event in his very nice blog ‘A peep into the past’. He also clarifies that nowadays instead of Thari Kanji, you get LMPT (short form for a plate of Laddu, Mixture, Pazham (banana) and Tea). Rajan adds - remember that Rs 50 was a fortune those days. 8 gms of gold cost Rs 36. By that account, Rs 50 then was equal to nearly Rs 10,000 of today.
The details of the money given including the name of the person is noted down in a note book. Since everyone gives, the organizer gets a substantial amount ranging from Rs 500/- to Rs 2000/-. An accountant or clerk for the occasion sat at the entrance of the pandal or hotel, collected the money and made a note of the contributed sum against the name & details of the contributor. The next time this person is invited to a Payattu by one of the attendees, he looked up his little notebook and repaid a multiple of the sum that was contributed.
I was a little surprised to note that the amount to be returned is double, thus signifying an ‘interest’ article, which is traditionally frowned upon by Moplah clerics. However, this is indeed the case, unlike a simple Kuri where only the principal has to be returned.
Some reader’s might wonder what this ‘Thari kanji’ (translates loosely as ‘rough grain gruel’) is all about. I happened to stumble upon a video explaining what it is and how this semolina plus Sooji rava based version is made. It is traditionally eaten after the Ramazan fasting period and is very different from anything you would have ever eaten, sweet with milk, spices & onions.
So why is it called Payattu? Payatuu (like in ‘kalari payattu’) means working hard at something. ‘Panam payattu’ is working hard at making money for an exigency.Little of this money is invested, and is mostly spent on deaths, births and marriages. Non-payment involved gross public humiliation and many villagers even courted suicide.
Chit comes from chitty and this is the usual term in Travancore whereas Kuri or Panam Payattu is the name employed in Cochin & Malabar. It became very popular later in the 19th century in church going congregations, with the Chit business soon becoming very popular in Trichur. Sakthan Thampuran, the Cochin King, settled 64 Syrian Christian families in the Trichur town and these astute business men with their traditional flair for trade soon built up Trichur into a flourishing centre. Their financial acumen has been mainly responsible for founding and building up the Chit system of financing which soon became an all-India institution.
So, that for you is the Kuri system or what can now be termed as ‘money-go-around’.
But then we know that avarice has no limits. Kuri’s which started as vehicles of neighborhood reciprocity and social custom soon became a lucrative business that eventually diversified into ‘blade’ companies. To read more about that, check this link.
Malabar Law and Custom - Lewis Moore, Herbert Wigram
Malabar – William Logan
Primitive Civilizations – Edith Jemima Simcox
Court ruling document
Toponymical Studies Calicut – Dr NM Nampoothiri