What is a Chit?

It is a CONTRACT between the foreman, as the Promoter is called, and the subscribers, who join voluntarily. It is a FINANCIAL SYSTEM under which the periodical and regular savings of a group of subscribers are made available to each subscriber, a SPECIFIED AMOUNT every month (instalment) for a SPECIFIED PERIOD. The Pooled funds every month are offered to the subscribers at monthly AUCTIONS and the subscriber who BIDS for the highest DISCOUNT is declared the PRIZE WINNER and given the PRIZE AMOUNT on proper security. A Prized subscriber also should continue to pay the subscriptions till the termination of the chit. The amount foregone as discount, less foreman?s commission is distributed among the subscribers as dividend.

A Chit group refers to a specified number of members agreeing to subscribe a specified amount for a specified period. For example, 40 members, 40 months, Rs.1,000/- a month. The number of members and the number of months are to be the same.

Any person under the Act responsible for the conduct of the chit and includes any Person, such as branch manager, discharging his functions.

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.