The second and the most popularly quoted legend with the festival are related to the demon king, Mahabali. It is said that Mahabali was a generous and kind hearted king of Kerala. He was powered by a boon granted to him by Lord Brahma, he was invincible and thus gradually won over the entire earth. Soon after he won the earth, he also won the territory of heaven and became its king.
He gradually rose up to become the undisputed ruler of all the three worlds. It was the time he inflicted violence upon the gods. Lord Vishnu then decided to overthrow Bali from his powers. He went to Bali in the form of a Brahman as he knew that the king rejoiced in doing good deeds and giving alms to the poor. He asked for three feet of land from the Demon king to which the king readily agreed.
Gradually, he Brahman increased in size. In one step, he measured the entire earth and in the other he covered the entire heaven, he then asked Bali that where should he put the third step. Bali, a man of his words, then laid down his head and asked Brahman to step his foot on his head. Vishnu disguised in the form of Brahman, thus appeared in front of Bali and offered him the Kingdom of the nether world.
However as Bali was very much in love with the people of his kingdom at earth, he asked Vishnu to give him a boon so that he can visit the earth once a year to which Vishnu readily agreed. Bali, since then is believed to come to earth in the month of ‘chingam’ according to the Malayalee calendar and the entire festival is celebrated to welcome their dear king Mahabali to earth.