How a chit fund works, in plain words.

A chit fund is a group savings arrangement. A fixed number of members each pay a monthly subscription for a fixed number of months. Every month, the pooled amount is offered to one member through an auction, and the amount that member forgoes is shared among the members as a dividend. Over the term, every member takes the prize amount once.

Yes. We are a private limited company incorporated in 1995, and our chits are registered with the Registrar of Chits, Medchal-Malkajgiri, Telangana under the Chit Funds Act, 1982. Our company registration number (Registrar of Companies) is 01-22108/95-96.

Check that the foreman is a company or firm conducting chits under the Chit Funds Act, 1982, that the chit is registered with the Registrar of Chits, that you receive a signed chit agreement, and that every payment is receipted. Informal chits run by individuals are not registered and give you no legal protection, and no genuine chit promises fixed returns. Our chits are registered with the Registrar of Chits, Medchal-Malkajgiri, Telangana.

Our auctions are held every month on the third and fourth Sundays. Each scheme’s auction falls on one of these two Sundays, fixed when the scheme starts. If that Sunday is a holiday declared by the office, the auction moves to the next working day. We will tell you your scheme’s auction day when you join.

Members who need funds that month bid by stating the discount they are willing to forgo from the chit amount. The member offering the highest discount takes the prize amount. That discount, after the foreman’s commission, is shared as a dividend among the members.

The dividend is your share of the discount from that month’s auction. In early months, members who need funds urgently tend to offer larger discounts, so dividends are usually higher. Later in the term, dividends usually become smaller. Our published schedules show the expected pattern, but the actual figure depends on each auction.

In month 1 no auction is held. As Section 21 of the Chit Funds Act, 1982 allows, the company, as foreman, takes the first chit in full, without any discount, so there is no discount to share and members pay the full instalment.

Month 5 is the company’s month. That month the chit goes to the company’s own ticket, so there is no auction and no discount to share, and members pay the full instalment. Auctions and dividends carry on as usual from month 6.

Yes. You may bid in any monthly auction until you have taken the prize amount once. After taking it, you continue paying your monthly subscriptions until the end of the term. Before the prize amount is paid, we take sureties, and where needed supporting documents, to secure the remaining subscriptions.

Regular payment matters to every member of the scheme. Late payments may attract charges as set out in the chit agreement, and irregular payments can lead to loss of dividend and of eligibility to bid in the auction. If you expect a delay, please speak to our office early.

Usually not. A scheme begins once all its places are filled. Message or call us and we will tell you when the next scheme you are interested in starts.

As the foreman, Srivatshava Chits receives a commission of 5% of the chit amount, in line with our bye-laws. It is taken from each month’s auction discount before the dividend is shared, so the dividends we publish are after commission. GST at 18% on the commission is payable by members, as set out in your chit agreement.

A copy of your Aadhaar with the first eight digits masked, so only the last four are visible. If you are registered for GST, as a business or as an individual, also give a copy of your GST registration certificate, so that we can issue GST invoices for input tax credit. We also need a recent passport-size photograph and bank account details. Before the prize amount is paid, the Chit Funds Act requires sufficient security for your remaining subscriptions. With us this means sureties for every scheme and, depending on your future liability and your relationship with the company, supporting documents such as property documents placed along with the sureties.