How a Chit Group Works
Consider a chit value of ₹5,00,000 with a chit period of 20 months.
Nagashiva Company forms a chit group by pooling together 20 members. Each subscriber agrees to contribute ₹26,500 per month for 20 months toward the chit group.
So,
₹26,500 × 20 members + ₹30,000 Company Commission (₹1,500 per person × 20 members)
= ₹5,30,000
Every member receives the chit amount once during the 20-month period through an auction.
The foreman (company) enters into an agreement with all subscribers and obtains approval from the Registrar of Chits after depositing the required security with the Registrar.
After receiving permission from the Registrar, the foreman conducts the auction.
For the priority disbursal of the chit amount, the foreman conducts an auction.
Only non-prized subscribers participate in the auction.
The subscriber who bids the highest discount receives the chit amount.
The maximum discount limit is 34%.
If more than one person bids 34%, a draw is conducted among the highest bidders.
The foreman disburses the chit amount to the winning bidder after obtaining the necessary guarantee for future liability.
The foreman’s commission is 6% of the chit amount, and this is included in the monthly installment.
The discount amount is divided equally among all members as the share of the discount.
Therefore, each month, subscribers receive an amount as their share of discount.
Thus, the subscriber pays the monthly installment after deducting the share of discount.
Example:
₹26,500 (monthly installment)
– ₹30,000 (share of discount)
= ₹20,000 (net amount payable)
A chit fund is a traditional Indian savings and credit system where a group pools money regularly, and each member takes turns receiving the lump sum either through an auction or lottery, managed by a foreman who earns a commission; it serves as both a savings tool and a source of quick credit, regulated by the Chit Funds Act, 1982.
A chit fund is a traditional Indian savings and credit system where a group pools money regularly, and each member takes turns receiving the lump sum either through an auction or lottery, managed by a foreman who earns a commission; it serves as both a savings tool and a source of quick credit, regulated by the Chit Funds Act, 1982.
A chit fund is a traditional Indian savings and credit system where a group pools money regularly, and each member takes turns receiving the lump sum either through an auction or lottery, managed by a foreman who earns a commission; it serves as both a savings tool and a source of quick credit, regulated by the Chit Funds Act, 1982.
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Whether you are planning for education, business needs, family expenses, or long-term savings, our team guides you at every step—from choosing the right chit group to timely payouts and complete account visibility—so you can invest with confidence and clarity.
My experience with Nagashiva Chit Fund has been very positive. The process is transparent, updates are clear, and the payout was timely when I needed funds. I feel confident continuing my investment with them.
