Nice article. The popularity of chit funds does give fascinating insight into what features LIH households prioritise in a financial product. For e.g. Flexibility and trust seem to be more important than rate of return. Goes against everything we find intuitive when designing products for savings.
Similarly interesting is the popularity of local moneylenders. Have noticed that MFI borrowers often prefer borrowing from moneylenders over MFIs or banks/NBFCs even at a much higher rate of interest. Flexible loan amounts and repayment schedules can tip the scales in the moneylender’s favour.
More financial players should focus on understanding these preferences before designing products, rather than try and retro-fit customer needs into rigid product structures.