Frequently Asked Questions

No doubts, We answer your every questions!

  • As per the Chit Fund Act 1982, permission from the competent authority is essential to start a new group.
  • An agreement in the form prescribed by the Cooperation Department should be signed (at the time of joining the chit group).
  • You have to pay the full subscription amount for the first and second installments.
  • The maximum discount on the value of the chit is 40% with a minimum of 5%.
  • A reminder for the payment of the installments for each month will be sent via SMS.
  • You can pay the installments directly in the office by Cash/UPI/DD/Cheque or you can pay it to our staff who will come to your doorstep.
  • Obtain the receipts from the collection assistant and ensure that they are entered in the pass book.
  • Failure to pay the installments before the due date will attract a penalty.
  • If more than one member quotes the highest amount during the auction, a draw will be held to determine the prize bidder.
  • As per company rules, a penalty of 1% to 5% will be levied on closed chit accounts. The bid prize money will be released to the winning bidders through the account before the next auction date after the formalities of the documents are completed.

What are chit Funds?

Chit funds are an indigenous traditional financial tool, combining savings and borrowing within a single scheme. Managed by registered chit fund companies or informal groups, these funds work by forming a group of individuals who contribute a fixed sum regularly to a common pool. This pool is then auctioned or distributed to one member of the group during each cycle, usually determined through bidding or a lottery system.

Chit funds serve dual purposes: they act as a savings mechanism and provide access to funds in times of need. The organizer, often the chit fund company, charges a fee or commission for managing the operations. Chit funds are regulated by the Chit Funds Act, 1982, to ensure transparency and safeguard participants’ interests, though unregulated schemes still exist.

They are particularly popular in rural and semi-urban areas due to their simplicity, flexibility, and accessibility, Chit funds are versatile, catering to various financial needs like household expenses, business investments, or emergencies. However, they come with risks, especially if run informally or without adequate oversight. Participants should choose reputable, registered chit funds to minimize risks and maximize benefits.

How does the chit Funds work?

1. They are easy to join and operate, as they do not require any documentation, verification, or collateral.
2. They offer a high rate of return, as the subscribers share the profit from the auction among themselves.
3. They provide liquidity and flexibility, as the subscribers can access the money anytime they need it, without any penalty or interest.
4. They encourage saving and financial discipline, as the subscribers have to pay the instalments regularly and punctually.
5. They foster social bonding and trust, as the subscribers belong to the same community or network.