Reading Time: 4 minutes Kameti is a form of community-based savings and lending in Pakistan. It has been around for centuries, with roots in the Indian subcontinent. The concept of Kameti was introduced to Pakistan during the colonial era. From there, it quickly became a popular method for communities to save and lend money. Kameti is derived from the Urdu word "Kam," which means "small," and "eti," which means "group."
Pakistan is a land of ancient traditions and customs, many of which are still alive and well today. One such tradition is Kameti, a popular form of community-based savings and lending.
Kameti is a form of community-based savings and lending in Pakistan. It has been around for centuries, with roots in the Indian subcontinent. The concept of Kameti was introduced to Pakistan during the colonial era. From there, it quickly became a popular method for communities to save and lend money. Kameti is derived from the Urdu word “Kam,” which means “small,” and “eti,” which means “group.”
The concept of Kameti is simple, but it has many advantages. For starters, it allows people to save money without having to go to a bank or pay interest. Kameti is a long-standing tradition in Pakistan and is run mainly by housewives. Kameti groups are formed based on trust and mutual understanding, so there is no need for collateral or guarantors. Members contribute a fixed amount of money each month, which is then given to a different group member each month. This means that every member gets a lump sum at some point, which they can use for a variety of purposes such as paying bills, buying gifts, or investing in a small business.
This entire process is done in an organized manner to ensure that no one is treated unjustly. For this purpose, a number of methods are employed. Most prevalent traditional method is making a draw. Names of participants are written on the pieces of paper and mixed together. The chits are then picked one by one in the presence of all the members. The order in which the names are written. The members of Kameti receive the collective amount in this order.
Let’s say there are six members. The duration of kameti will therefore be six months. If the agreed amount of submission is 1 lakh, every member of Kameti will have to submit one lakh each month. Sometimes the order of receiving Kameti is not decided in one sitting, instead it’s done at the start of each month. Another way of deciding the order of recipients is by determining the needs of the members. In other words, after mutual decisions the Kameti is provided to the one who needs it urgently. Finally, if a person fails to contribute the decided amount or wants to exit, a new participant is added to continue and the money is provided to them according to the draw. Both the participants can then get the fair amount they had contributed.
According to the State Bank of Pakistan, only 21% of Pakistani adults have access to formal financial services, leaving a vast majority of the population unbanked. Kameti fills this gap by providing a platform for people to save and access credit without having to go through traditional banking channels. Moreover, Kameti is an inclusive system that allows people from all walks of life to participate. It is not uncommon to see a Kameti group comprising people from different professions and social backgrounds.
Kameti provides an accessible and affordable way for individuals to save and borrow money, with no interest charged on the loans. A survey by the Karandaaz Pakistan revealed that 78% of Pakistanis do not save through formal financial channels, highlighting the need for community-based savings solutions like Kameti.
Housewives often organize Kameti meetings as social events, known as kitty parties. Members get to meet, share ideas, and build relationships while saving money. The meetings are usually held at a member’s home or a community center, where members bring food and drinks to share. Kameti has become a part of the social fabric of Pakistan, and many members have formed lifelong friendships through it.
Despite its popularity, Kameti has its share of risks. One of the main challenges is legal. While Kameti is recognized by the government, there are no specific laws governing its operation, leading to confusion and disputes.
Another challenge is the lack of government support. While Kameti is an effective tool for financial inclusion, the government has not done enough to promote and regulate it.
Negative perceptions of Kameti also pose a challenge, with some individuals viewing it as a form of gambling rather than a legitimate financial practice.
Moreover, members need to trust each other to contribute and manage the money responsibly. There is also the risk of fraud or embezzlement by a member who may run away with the pool money. Therefore, it is essential to have an explicit agreement in place that outlines the rules and responsibilities of each member.
In recent years, the tradition of Kameti has also been adapted to the digital age in Pakistan. Online Kameti services such as ‘Oraan’ and ‘Kameti’ have emerged, allowing participants to form Kameti groups and make contributions online.
One of the advantages of online Kameti is convenience. Participants can join and make contributions from the comfort of their own homes, eliminating the need for physical meetings. Online platforms also provide transparency, with participants being able to view the contributions made by each member. They can also keep track of the progress of the Kameti.
However, there are also potential challenges associated with online Kameti. For example, there is a risk of fraud or cybercrime. It is important for participants to only use reputable and secure online platforms to protect their personal and financial information.
In conclusion, Kameti is a time-honored tradition in Pakistan that provides a financial management system for people. It provides opportunities for people who don’t have access to formal banking channels. Its origins can be traced back centuries in communities across the country. Moreover, it continues to be a popular and effective means of saving and investing. While there are risks involved, Kameti has become an integral part of the social fabric of Pakistan. Many members have formed lifelong friendships through it.
Joining a Kameti group can be a great way to save money, build relationships, and gain access to credit. If you’re interested in starting a Kameti, be sure to do your research, with people you trust to get started.
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