Paper Chit System Banned in Surat in Favor of Promissory Notes
January 04, 16
(IDEX Online News) – Following a campaign to abolish the traditional paper chit system for trading goods, the Surat Diamond Association (SDA) has now made it mandatory for diamond merchants and manufacturers to buy and sell diamonds using promissory notes.
The campaign, which was implemented last year, was designed to reduce defaults and to offer better protection by moving away from the “chitti” system, which was based on mutual trust to more secure transaction methods.
According to SDA president Dinesh Navadiya, some 85 percent of merchants and manufacturers have banished paper chits for the promissory note system, as reported by the Times of India.
He says the promissory notes will protect sellers from unscrupulous operators.
Unlike the chit system, the more formal promissory notes allow victims of fraud to take legal action.