Pooled funds are offered to subscribers each month at monthly auctions and the subscriber who offers the highest discount is declared a winner and receives the prize amount with an appropriate guarantee. An estimated subscriber should continue to pay for subscriptions until the end of chit. The amount that has not been deducted from the commission against the foreman is paid as a dividend between the subscribers. 5.2% of the value of Chit is deducted from the amount on the commission against the foreman and the balance paid as a dividend to all eligible subscribers in all chts started after October 2008. The dividend is adjusted at the time of subscription for the next tranche. In accordance with this Directive, four groups with a duration of 30, 40, 50 and 60 months will be listed on the stock exchange by our branches. 4.6 The offer/tender/hospitality contract should only be placed in the branch where the Chit takes place. Chit funds are a popular way to save on borrowing impensal time. The concept of the Chit Fund is based on the principle of reciprocity, in which a group of people participates in a system to contribute to fixed periodic amounts and distribute the amount thus collected to each of the participants in turn. The foreman, that is, the Chit Fund Company itself, implements this scheme of a Chit fund. Example: The operation of the Chit funds is best explained with the help of an example. Take a typical chit fund with 25 members who contribute rs 100 per week.
This fund lasts 25 weeks. In the first week, all members donate Rs 100. An auction meeting will be organized, through which the foreman of the Chit fund presided. The total amount is Rs 2500. The auction starts with this amount. Bidders begin to bid by disconseigning this amount (Reverse Bidding). Consider that the lowest offer of a person is Rs 2,150 (a discount of Rs 350). This amount (Rs 2,150) is given to this successful bidder. The rest of the amount (Rs 350) is divided by 25, bringing the discount per person to Rs 14. This discount amount is refunded to each member.
Sometimes a portion may be kept by the foreman as a service fee, usually in organized Chit funds. These (25) subscribers form a “Chit Group” and the Chit fund company can operate many such groups. For each group, the approval of the articles and the certificate of opening of the registrar`s office, Chit Funds, is a must. A subscriber`s share in a chit is also called a ticket. Various Chit funds work in different ways; and there are also many fraudulent tactics that are practiced by many private companies. The basic need to perform a “chitty” is a group of people in need called subscribers….