Guide
Chit fund or peer-to-peer lending? Two different things.
Both pool money among people, so they are often confused. They work under different laws and suit different needs. Here is a plain comparison.
About us: Srivatshava Chits Private Limited is a chit fund company registered under the Chit Funds Act, 1982, in Kukatpally, Hyderabad, since 1995. We are not a peer-to-peer lending platform and do not arrange loans between individuals.
Side by side
How they compare
| Topic | Chit fund | Peer-to-peer lending |
|---|---|---|
| What it is | A group of members save a fixed amount every month. Each month one member takes the pooled amount through an auction, until every member has taken it once. | An online platform matches people who want to lend money with people who want to borrow it. Each lender’s money is spread across individual loans. |
| The law | The Chit Funds Act, 1982, administered by the Registrar of Chits in each state. | The Reserve Bank of India’s directions for NBFC peer-to-peer lending platforms. |
| What you get | Disciplined monthly saving, a share of each month’s auction discount as a dividend, and the prize amount once during the term, when you need it. | Interest from borrowers, if they repay. The platform does not guarantee the principal or the interest. |
| Who you deal with | A registered foreman company, here Srivatshava Chits, which conducts the auctions and keeps the scheme’s accounts. | The platform, which matches you with borrowers you usually never meet. |
| Security | The foreman keeps security with the Registrar of Chits for every scheme (Section 20), and members who take the prize amount give security for their remaining instalments. | No credit enhancement or guarantee is allowed. If a borrower does not repay, the lender bears the loss. |
| Limits | Set by the scheme you join, from ₹5 lakh to ₹25 lakh with us. | RBI caps how much one lender can lend in total across all P2P platforms. |
| Getting money when you need it | Bid in the monthly auction for the prize amount; the earlier you take it, the larger the discount you usually give up. | Depends on borrowers repaying; platforms may not promise early withdrawal. |
| Guaranteed returns? | No. Dividends depend on each month’s auction. | No. RBI does not allow P2P lending to be sold as an investment with assured returns. |
Disclaimer: General information only, not financial advice. Rules can change; check the latest Reserve Bank of India directions for P2P lending, and read the chit agreement before joining a chit. Full disclaimer
Questions
Common questions
Is a chit fund the same as peer-to-peer lending?
No. Both pool money among people, but they work under different laws. A chit fund is a group savings scheme under the Chit Funds Act, 1982, where each member takes the pooled amount once through a monthly auction. Peer-to-peer (P2P) lending is lending to individual borrowers through an online platform regulated by the Reserve Bank of India as an NBFC-P2P.
Is Srivatshava Chits a P2P lending company?
No. Srivatshava Chits Private Limited is a chit fund company registered under the Chit Funds Act, 1982, conducting chits in Hyderabad since 1995. We do not run a P2P lending platform and we do not arrange loans between individuals.
Which is better for me, a chit fund or P2P lending?
They meet different needs. A chit suits people who want to save every month and take a lump sum when life needs it, such as for a home, a wedding, education or a business. P2P lending suits people who want to lend money to borrowers and can accept the risk that some borrowers may not repay. We can only explain our own chit schemes; for anything else please speak to a financial adviser.
Is my money guaranteed in a chit fund?
Dividends and the exact prize amount are not guaranteed: they depend on each month’s auction, and a chit is not a bank deposit. The Chit Funds Act builds in protections: the foreman keeps security with the Registrar for every scheme, and members who take the prize amount give security for their remaining instalments.
Can NRIs join a chit fund?
Yes. NRIs may subscribe to chits on a non-repatriation basis, through normal banking channels, as permitted under FEMA. See our page for NRIs for the details.