What is a Chit ?
A Chit fund is a kind of savings scheme practiced in India. A chit fund company is a company that manages, conducts, or supervises a chit scheme—as defined in Section of the Chit Funds Act, 1982.
“Chit means a transaction whether called chit, chit fund, chitty, kuree or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical installments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount”
Why Chit Fund ?
CHIT provides a good source of finance for different type of people viz., small investors, businessmen, small scale industrialists etc.
AChit is the Only Financial Product that allows you to Save and Borrow.
The non prized subscriber who is a saving member up to the last installments gets dividend which is comparatively
higher than the interest that are accrued by way of Recurring Deposit Schemes.
The purpose of drawing the prized amount need not be disclosed. It can be used for any need by the member
How it works?
The basic necessity of conducting a ‘Chitty’ is a group needy people called subscribers. The foreman—the company or person conducting the chitty—brings these people together and conducts the chitty. The foreman is also responsible for collecting the money from subscribers, presiding over the auctions, and keeping subscriber records. He is compensated by a fixed amount (generally 5% of gross chitty amount) monthly for his efforts. Other than that, the foreman has no specific privileges, he is just a chitty subscriber. A simple formula depicts the pattern of the chitty:
