F . A . Q

What is a chit scheme?
Chit scheme denotes a transaction by which a person generally known as foreman enters into an agreement with a specified number of persons that every one of them shall contribute a specified sum of money, generally by way of monthly installment over a definite period. The money that is pooled in is then auctioned every month amongst subscribers and the one who bids for the highest discount is declared the winner and is given the prize amount. The amount that the chit winner forgoes as discount is distributed amongst the subscribers as dividend after subtracting the promoter’s commission.
What are the benefits of investing in a Chit Fund?
Benefits of Investing in Chit Funds are numerous; a few are,
  • You can choose how much you want to save per month.
  • The rate of return is very high compared to other investment options and it is also secure form of investment.
  • Whenever a subscriber has an unexpected financial requirement like marriage or medical emergency etc., a subscriber can bid for the prize amount and if he emerges as the prized subscriber, he gets the lump sum prize amount, which constitutes a timely financial bounty to get over critical times. This lump sum payment of the chit amount is of timely financial help without having to go through the hassles of taking a loan.
  • A member in a registered chit fund company is very much secured than a member in a non-registered company.
  • Investments in chits are safe without having to worry about fluctuations in the market.
What is a Chit group?
A Chit group refers to a specified number of members agreeing to subscribe a specified amount for a specified period. For example, 20 members, 20 months, Rs.500/- a month. The number of members and the number of months are to be the same
What is Chit Amount (SALA)?
The sum-total of the subscriptions payable by all the subscribers for any installment of a chit without any deduction of discount or otherwise.
What is Discount?
The difference between chit value and the amount at which a successful bidder takes a chit in an auction is known as auction discount
What is Dividend?
Auction discount minus company commission is the total group dividend. Total group dividend is distributed equally amongst all the subscribers. This dividend so distributed is deducted from the next installment payable by the subscriber
Who is a Subscriber?
Subscriber is a person who holds a fraction of a ticket and also a transferee of a ticket or fraction thereof by assignment in writing or by operation of law.
What is Ticket?
Ticket means the share of a subscriber in a chit.
Who is a foreman?
Forman is a person who under the chit agreement is responsible for the conduct of the chit and includes any person discharging the functions of the chit and includes any person discharging the functions of the foreman under section 39;
Is the contract of the subscribers with the foreman valid for an indefinite period?
No. It is valid only for the duration of a chit group and until the liabilities of subscribers to foreman or vice versa are discharged or paid in full
What is Chit agreement?
Chit agreement means the document containing the articles of agreement between the foreman and the subscribers relating to the chit.
How are the subscribers enrolled for a group?
The subscribers have to fill in the application form furnishing the following particulars:
  • Name, Date of Birth, ID Proof
  • Residential /Work Place Address
  • Contact numbers
  • Nominee's Name, Address & Contact numbers
  • Relationship with the Nominee
They also have to sign the declaration that they have read and understood the terms & conditions of the chit agreement.