What is Chit ?
A chit plan is a unique financial scheme that combines the features of both saving and borrowing, often popular in India and similar economies. It is organized by a chit fund company or a group of individuals, where a specified number of members come together to contribute a fixed sum of money every month into a common pool.
Flexibility in Contribution
The collected amount is then auctioned among the members, and the highest bidder (the one willing to take the least amount after deducting the bid amount as commission or discount) receives the lump sum.
About Chit Plans
A chit plan is a financial arrangement where a group of members contribute a fixed amount monthly to create a common pool.
Serves as both a savings and borrowing tool, offering participants financial flexibility.
Members can bid to receive the pooled amount as a lump sum when needed, based on the lowest bid.
All members contribute a predetermined fixed amount regularly. Dividend Benefit: After each auction, the remaining amount (after the bid discount and organizer's commission) is distributed among all members as a dividend, reducing their effective contribution.
After each auction, the remaining amount (after the bid discount and organizer's commission) is distributed among all members as a dividend, reducing their effective contribution.
Every member gets a chance to receive the pooled amount once during the tenure of the chit.
