May 26, 2009

The ‘Kuri’ systems of Kerala

Maddy @ Tuesday, May 26, 2009
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.

References

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

23 Response to "The ‘Kuri’ systems of Kerala"

  1. Nikhil Narayanan said...

    Maddy
    Wanted to read on this topic for long with too much of Micro finance being talked about in the current times.
    Thanks for the post.
    Regarding Thrissur, South Indian Bank played a pivotal role in reducing the influence of blades,afaik.When you come to think of it,Thrissur can be called the banking hub of the state.Catholic Syrian,Dhanalakshmi Bank,LKB etc also started their operations in TCR district.
    Talk about being enterprising.

    -Nikhil

  2. Happy Kitten said...

    remember Hubby mentioning abt "kuri" kalyanams but only now I know the same in detail... I guess it was a good way of getting a girl married off when cash was tight..

    as for Chitty.. even here in Kuwait there are so many conducting it.. and some have even swindled the whole money!

  3. RAJI MUTHUKRISHNAN said...

    A very nice and informative post. Here in Taminadu this chit business is still extant. People like my domestic assistant still participate in the 'seettu' (chit) system.
    Sari, jewellery and utensils shops also have the chit system where a monthly payment is made for a year. There is a lottery for a monthly winner, who then need not pay the rest of the amount, but can collect the goods for the whole amount. It is a good incentive for saving - unless of course you don't want to buy the stuff at all.

  4. Bhel Puri & Seekh Kabab said...

    I was only aware of the auction chit, so it was good to read about the other systems. Nicely researched as always.

  5. Maiji said...

    Interesting and informative reading. It took me back to those days in Trivandrum when 'chitti' was a household topic. I remember how my 'mama' would advise my mother about joining this or that chitti. Why even I was myself a member of those chitti funds, though I was in Delhi.Talking of Delhi, the chitti is now known as kitty party, and it is flourishing everywhere. Then there were the 'pathiram' chiitis and the saree chittis of which I have also taken advantage. Chitti will always flourish everywhere, though under different names.

  6. Jo said...

    Nice article Maddy. Coming from Thrissur, I have seen that this Kuri thing helping a lot of families for their financial plans in my childhood days. There were so many frauds too. But the Kuri companies still exist in Thrissur.

  7. P.N. Subramanian said...

    It was really an interesting post. The kuri system is practiced by housewives in various localities where they regularly deposit the monies taken out of the pockets of their husbands and anxious await their chances in the draws.

  8. harimohan said...

    intresting indeed
    I remember one local cameraman with a studio scooting after the local kurie he ran went bust and he absconded for ever with ?
    his brother is now the studio owner thanks to the kurie

  9. Urs....Jina said...

    Wow..Great read...
    But when I started reading it for someweird reason, I thought you are talking about chandana kkuri's..:P

  10. Maddy said...

    Thanks Nikhil, HK, Raji, hari, Jina, Jo, PNS and BPSK...

    Thanks Maaji for your visit and comment. I am honored. I have read your Pondi stories and was going to link to it in a Poom puhar story later...

    Kuris were started with the right intention, but when the tight circles of village life were loosened by development and the Kuri Moopan vanished, the nefarious guy took advantage of the simpleton's contributing..

  11. Indrani said...

    Interesting Maddy.
    Never had been a part of this or the kitty parties. But I have heard incidents from happy participants of this practice.

  12. Brown Country said...

    Sir

    Thanks for this really good and informative post about chitty and its history. I found this post rather accidentally while searching for something else (sorry for this "late" commenting).

    I want to add three things here.

    1. Until recently, we had had in Thiruvananthapuram region ari chitty or nellu chitty (or rice chits), where rice was exchanged in the place of money. Its working is simple. Every member contributes a certain quantity of rice during every harvest season (that is, twice or thrice per year). One person (supposedly selected by draw of lots; but in practice determined by the nature of the need of the person) gets the whole contribution minus the "commission" for the person who conducts the chitty. This scheme slowly faded away, possibly with the decline in rice cultivation in these parts. Perhaps, somebody should try a rubber sheet chitty!

    2. You are right to point out that the functioning of private chit business has become "nefarious & dubious". The notorious Kanichukulangara murder case was the result of the feud between two private chit companies. And there have been instances of chitty mooppans disappearing with all the money. However, many private chit companies collapse not because their owners swindle the money. They suffer when the persons who have already received the money fail to repay. At least four or five chit-company collapses I know in Thiruvananthapuram district happened because of some 'wily' customers who refused to repay the money. Most of the private operators cannot survive if, say, 10% of the total members in a chitty do not repay further installments after getting the prize money. After all, this is also a zero sum business.

    3. There is an organization run by Government of Kerala, called KSFE (www.ksfe.com), mainly for conducting chitties. It was started in 1969 in Trichur (where else?). I must add here that (sheepishly, in fact) I am working in KSFE. So, I am not going to paean its virtues. I think, though not sure, Karnataka government also runs a similar organization.

  13. Maddy said...

    Thanks Brown Country

    1. That is interesting, I think you are right, if you look carefully you will definitely find that any kind of sale-able commodity became a medium for barter - in direct sales or via a chitty. That has been so.

    2. Yes, of course, default is the bane of the chitty system. What was a trustable group in a desham morphed into a group of good and bad guys and the risk increased, trust decreased..

    3. I know, I remembered that I have a friend working there - Sreekumar Pillai from Trivandrum.

  14. Shahnvas A. said...

    Wow! Nice post.
    I was fortunate to have been present in a 'Kalyanam/Chaya'kuri when my grandfather conducted one such event back in 1972/1973. Like you wrote, there is always a book of receipts and expenses. This book is considered a treasure and closely guarded since it could make or break your honor! Maybe next time round I should search in the attic of the old 'Tharavaadu' and find some 'treasure'.
    Very informative post indeed which I happened upon by accident when searching for the 'Chaya kuri'. In fact I was having a chaya and avil,coconut,sugar mixture for breakfast(the same they had for the 'kuri' I mentioned earlier)-lol.
    -Shahnavas, Qatar

  15. Maddy said...

    thanks
    Shanavas for your comment - appreciate it

  16. Roshan Gomez said...

    in my wife's hometown, a fishing village in Kollam called Shakthikulangara, the concept of kuri chitti prevails, it is known here as porikka, and this a latin catholic community.

  17. Maddy said...

    thanks roshan...
    and keep visiting..

  18. Premnath.T.Murkoth said...

    Good custom of kerala,

  19. Maddy said...

    thanks premnath

  20. tankam said...

    It is interesting to note your description of KURI types.
    As I was growing up in Kerala, my grandmother who was bringing up seven or eight children on her own, had to participate in KURI to get a major work done on our house "tharavad" or pay taxes to Kavalappara Moopil nair on behalf of the paddy fields she owned.
    I any event, those KURIs were on an honor system, where every one contributed the same amount until the predetermined period of the KURI period. it worked, and every one was happy to get their financial needs met in a timely fashion.
    Enjoyed reading your MUSINGS, may be you could write one about the Caste systems in kerala.I grew up observing it and experiencing it..Makes me nostalgic to read your writings.
    Tankam nair

  21. Maddy said...

    thanks tankam..
    glad you enjoyed this...you know i write about Malabar history as well in the other blog
    maybe this will interest you for it is in your part of the world.
    http://historicalleys.blogspot.com/2010/04/kavalappara-bharatapuzha-vaniamkulam.html

    in my historic alleys site there are many blogs covering the caste system. also pls check this article i wrote some years ago
    http://maddy06.blogspot.com/2007/09/vivekanadas-lunatic-kerala.html

  22. Prakesh said...

    Its a very nice article sir..
    I am from thissur and from the Kuri Land itself.Thrissur is known for the kuri companies always.The big players in this area are now Pooramkuries & New Millenimum ..But There is alot of another companies who formed before 1947 and working in a very good manner.If we are verifying the datas you can find around 50 Chit companies are forming in Kerala itself and alot of them are vanishing also.
    The major problem for Kuri Companies is there is no central law for these type of companies.In kerala KSFE formed for a specific puprose and the kerala chit act only supports the same..

  23. Maddy said...

    thanks Prakesh.
    nice to hear from you and glad you liked it..