How Chits Work

8/10/2019 How Chits Work

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Indiranagar Chit Funds & Trading

Company Pvt. Ltd.


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Established in 1976, and entering into

the 37th year the company has risenfrom ordinary to extra ordinary.

The sustenance has been record

breaking with new team of leaders andproactive steps to meet the growing

and challenging commitments.

To simply put it " We are one stop

away for all financial solutions.


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What is a Chit Fund?


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A Chit fundis a kind of savings scheme practiced in India.

Chit funds also played an important role in the financialdevelopment of people of south Indian state of Kerala, byproviding easier access to credit.

A collection of members called a chit group makes theircontribution in the form of money to collect a chit amount andthey bid in an auction to be awarded with the prized moneywhich is equal to the chit amount the discount and the foreman'scommission.

The chit is registered with the Deputy Registrar of Chits and aregistered number is obtained. The Foreman promotes andconducts the Chits as per the regulations of the Chit Funds Act

and Rules.


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Members invest afixed amount everymonth.

This collection isavailable for borrowing.

(Say in a group of 10, each member invest Rs. 10,000 everymonth i.e. Rs. 1,00,000 per member for 10 months)

How Chit Funds Work?


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On a specific day of every month,members will gather to bid forRs. 1,00,000.

The organizer would start the bidwith 5% and will seal the bidding atmaximum of 30%.

If there are more than one bidder then

pick by lot will be applied.

Other times the members can bid anyamount above Rs. 5,000.



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Assume a bidder bids for Rs.10,000 and someone wants tochallenge his bid, should be aboveRs. 10,100.

This way an Auction goes on.

Suppose the highest bid is for

Rs. 20,000 then the deal is closed.



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Now the bidder wouldbe awarded Rs. 80,000/-

(His bid amount would be deducted.)



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Rs. 20,000 deducted fromthe bidder would be shared

equally among the members.



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So for the following montheach person will pay onlyRs. 8,000 (10,000-2,000).

This is the saving member getsevery month.


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Why Chit Funds?Chit schemes are organized on a personal basis and have

lesser stringency involved.

Decision making is comparatively faster.

The income from chit schemes compare favorably with the

incomes from bank schemes in many cases.

Liquidity is compromised when you make a FD or join a

recurring deposit scheme. You may get a loan approximately up

to 75% only of your deposits.

In chits, the prize amount is always more than the amount ofdeposits made in the chit.

Rate of Returns will be calculated from the day of joining the

chits and in case you borrow the chit, you still are benefited from

the returns.


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BenefitsRate of Interest is cheaper.

Less Documentation

Chits can be drawn at borrowers will.

Payments are assured within 30 days.

In Chits, the customer is looked upon as a valued

subscriber and not a borrower.

Investment is safe without having to worry about market

fluctuation and govt. policies. You can opt for as many chits

as you want.


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SCHEMES

Chit Value Duration / Months Total Members Monthly Subscription

Rs. 50 Lakhs 25 25 Rs. 2,00,000

Rs. 50 Lakhs 40 40 Rs. 1,25,000

Rs. 25 Lakhs 25 25 Rs. 1,00,000

Rs. 25 Lakhs 40 40 Rs. 62,500

Rs. 10 lakhs 25 25 Rs. 40,000

Rs. 10 Lakhs 40 40 Rs. 25,000

Rs. 5 Lakhs 25 25 Rs. 20,000

Rs. 5 Lakhs 40 40 Rs. 12,500

Rs. 3 Lakhs 30 30 Rs. 10,000

Rs. 2 Lakhs 40 40 Rs. 5,000

Rs. 1 Lakh 40 40 Rs. 2,500

Rs. 1 Lakh 25 25 Rs. 4,000


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Thank You

Documents

How Chits Work