Good to Know:

CHITS provides a good source of finance for different type of people viz., small investors, businessmen, small scale industrialists etc.

CHITS is a good means of savings for any contingency requiring substantial amount.

It serves all persons whether they desire for savings or borrowing to meet extraordinary expenses on special occasions like Marriages, Construction of houses etc.,

Adequate care is necessary to choose a suitable Group. The selection of a particular Group, largely depends on the subscriber’s capacity to provide surplus funds month after month from his normal income for this purpose. This aspect is very important for the subscriber as well as the company’s point of view to avoid any embarrassment at the time of releasing the prize money or in releasing chit instalments month after month.

1.What is a Chit?

It is a CONTRACT between the foreman, as the Promoter is called, and the subscribers, who join voluntarily. It is a FINANCIAL SYSTEM under which the periodical and regular savings of a group of subscribers are made available to each subscriber, a SPECIFIED AMOUNT every month (instalment) for a SPECIFIED PERIOD.

The Pooled funds every month are offered to the subscribers at monthly AUCTIONS and the subscriber who BIDS for the highest DISCOUNT is declared the PRIZE WINNER and given the PRIZE AMOUNT on proper security. A Prized subscriber also should continue to pay the subscriptions till the termination of the chit. The amount foregone as discount, less foreman’s commission is distributed among the subscribers as dividend.

  1. What is a Chit group?

A Chit group refers to a specified number of members agreeing to subscribe a specified amount for a specified period. For example, 20 members, 20 months, Rs.500/- a month. The number of members and the number of months are to be the same.

  1. Who is a foreman?

Any person under the Act responsible for the conduct of the chit and includes any Person, such as branch manager, discharging his functions.

  1. Is the contract of the subscribers with the foreman valid for an indefinite period?

No. It is valid only for the duration of a CHIT GROUP and until the liabilities of subscribers to foreman or vice versa are discharged or paid in full.

  1. What are the benefits of chit Subscribers?

a) To save in small amounts to receive a lump sum during the period of chit.
b) To borrow the future savings in advance. Some subscribers join chit funds to borrow and others to save.

6.What is Chit agreement?

The Chit agreement is a contract between the foreman and the individual subscribers to a chit group. It is a set of bye-laws or regulations dealing with the procedure for the conduct of chits. It will be signed in duplicate, duly witnessed. The chit agreements shall contain the name and address of the subscriber, the number of tickets allotted to him, the number of instalments and the instalment amount payable, the interest/penalty for delayed payment, the probable date of commencement of chit and its duration, the manner of deciding the prize winner at each instalment, the maximum discount to be foregone at each instalment, the mode and proportion of dividend and foreman’s commission, the date, time and place of auction, the instalment at which the foreman is to get the chit amount, the name of the bank, the security to be furnished by prized subscriber etc., Though each subscriber is supposed to sign the chit agreement, in practice, each subscriber signs a declaration in the application form that he has read and understood the terms and conditions of the Chit Agreement. The declaration of all the subscribers are detached from the application form, pasted in a piece of paper and filed with the registrar.

  1. How are the subscribers enrolled for a group?

The subscribers have to fill in an application form furnishing particulars of their names, residential and office addresses, approximate gross monthly salary, names of nominees and their relationship to them. They also have to sign the declaration that they have read and understood the terms & conditions of the Chit Agreement.

FAQ

The chit fund schemes are customer friendly and the chit fund companies are run professionally. Your investment will be safe and secure. Make sure you invest in a registered chit fund company with excellent reputation.

Yes, of course, it is safe. We are registered under the Chit Fund Act, 1982 under the purview of the RBI. So your investment in safe, secure, and legal.

We always make sure to pay our subscribers on time all year round. Making prompt payments is our strength where subscribers always come back with repeat investment with us.

Yes, our dedicated team is known for its expertise in the field, and with a computerized environment, the day-to-day activities run efficiently.
 

Yes, it is. Chits work out to be less costly than various other means of financing.

1.HOW DOES A CHIT OPERATE?
Chit is a mutually beneficial scheme where group of people contribute towards the chit value and one member from the group is given the prize amount and the dividends are distributed to all the other members. For example if we consider a chit value of Rs.1,00,000 with 20 members in the group, each member has to contribute Rs.5,000 where by (20 X 5,000) Rs.1,00,000 is collected.

Members participate in the auction and the person who discounts the maximum is declared as the prized subscriber. If there are more than one participant for maximum discount the successful Bidder will be determined by way of lottery. Where in, the tokens bearing the numbers allotted to the members is put into a box and one token is drawn by any of the member present in the auction and thus, the member whose number is mentioned on the drawn token will be declared as the successful Bidder.

25 % is the maximum bid allowed, which means a person foregoes Rs.25,000/- and the balance Rs.75,000/- is paid to the prized subscribers. In addition, 5 % goes to the company towards Foreman’s commission for conducting the chit and balance of the discount amount is distributed equally amongst all members of the group. That is 25 % is distributed to all the members by which next month they have to contribute (Rs.5,000 – 1,000) = Rs.4,000 only and Rs.1,000/- is declared as dividend for that month.

When there are no maximum bidders, then the members will bid in the open auction that is conducted within 15 minutes for each group and the person who bids the highest is declared as successful Bidder. For example: Suppose, in the 10th month the successful bidder was declared at 20 % then all the members of the group will get a dividend of Rs.800 each i.e (Rs.16,000 divided among 20 members) and each members has to pay 4,400 towards installment.

Therefore the members have to pay the installment amount less the dividend, the dividends earned work out to be the interest on the installment payments made by the member. Successful bidder is supposed to give the required sureties depending on the future liability of the chit. Only non-prized subscribers whose payments are up to date can participate in the auctions.

Every month there is a successful bidder who gets his prized amount on submission of required Guarantors. The prized subscriber has to continue to pay the monthly installments till the termination of the chit.

Those members who do not want to draw the chit can contribute to the chit and after the 20th month if there are no bidders for the auction, the auction is decided by lot among the non-prized subscribers and the successful Bidder is paid the prize amount. They either have options to submit sureties or prefer future liability deducted upon which balance amount is paid from the prized amount. The dividend accrued for the 20 months are the returns on investment for the monthly deposit made to their accounts.

2. WHAT ARE THE BENEFITS OF A CHIT FUND?
Chit Fund has flexibility to borrow or save. By paying one-month installment amount, a person can get to borrow from the chit value, by offering a discount not exceeding the maximum limit ascertained in the chit agreement.

In a chit value of Rs.1,00,000/- for a period of 20 months, first the subscriber can get an amount of 75,000 by paying only Rs.5,000/- and remaining installments he pays over a period of 20 months. The rate of borrowing is much cheaper than several other financial schemes.

The dividend got by the non-prized subscriber who is a saving member is comparatively higher than the interest made by way of recurring deposit scheme.

3. WHY SHOULD I PREFER ACHILLES CHIT FUNDS (P) LIMITED TO OTHER CHIT FUND COMPANIES?
ACHILLES CHIT FUNDS (P) LIMITED. is managed by qualified and well-experienced veterans in the field,
High quality of members / subscribers in all the Schemes – background, financial capability, guarantors
Bondage between the Company and the Members / Subscribers – Admission thru reference, repetitions, multiple tickets in the Group
100 % recovery is assured,
Timely payments upon completing documentation,
Daily / weekly / bi-monthly / monthly payments at convenience collected from the place of their choice

4. WHAT IS THE SECURITY FOR THE MONEY?
Any member in a registered chit fund company is very much secured than a member in a non-registered company.

A Registered Chit fund company makes a security deposit equal to 100% of chit value in a Schedule Bank as a Fixed Deposit, which is pledged in favour of Registrar of Chits to the extent of its tenor.

5.WHAT ARE THE BENEFITS FROM SAVING IN CHIT?
The dividend which a member earns every month is the amount saved. Even if a member takes the chit at the last month, the total dividends earned by him will be more than the interest rate of the Bank.

6. WHAT ARE THE INCOME TAX BENEFITS FROM SAVING OR BORROWING?
The dividends earned in a chit are not taxable. If one wants to claim the bid as loss, then these dividends have to be shown as revenue / income in the assessment. Hence the entire dividend earned in a chit is not taxable if one does not claim the bid amount as loss.

7. HOW IS CHITFUND A BETTER SAVING OPTION WHEN COMPARED TO A DEPOSIT IN A BANK, MUTUAL FUND, ETC?
By joining in a Chit, a person is forced to save a part of his income to his planned or unplanned investments or expenditure in future. Borrowing from a Chit Fund is easier than borrowing from a Bank. The chit loss is lower than the market rate of interest. If a person likes to save the return he gets in a chit by way of dividend is high than the interest from banks on recurring deposits.

8. WHAT ARE THE VARIOUS CHIT GROUPS AVAILABLE IN ACHILLES CHIT FUNDS (P) LIMITED.?
ACHILLES CHIT FUNDS (P) LIMITED. has wide range of chit groups which suits all kinds of people for Example: Individual, Employee, Professionals, Agriculturists, Land Lords, Proprietors, Partnership firms, Companies, Corporate offices, Organization etc., it has a wide range of Chit values starting from Rs.1,00,000 to a maximum range of Rs.1,00,00,000 under 20 / 25 / 30 / 40 / 50 months.

9. WHAT ARE THE DURATION OF CHITS?
ACHILLES CHIT FUNDS (P) LIMITED. has various ranges of duration of chit groups. They are 50 months (Long term), 40 months (Long term), 30 months (Long Term), 25 months (Medium Term) and 20 months (Short term) with 50, 40, 30, 25 and 20 members respectively forming the group.

10. HOW MANY CHITS CAN I TAKE IN A CHIT GROUP?
A person can take up to 3 chits in a group.

11. HOW ARE THE AUCTIONS CONDUCTED?
Auctions are conducted in the branches where in the foreman declares the successful bidder. All non-prized subscribers who have paid their installments up to date are eligible to participate in the auctions. In case the payment is made by cheque, the cheque should have been realized one day before the auction date. For every group the auction time is 15 minutes on a specified date and time.

During the first few months there will be more number of participants willing to bid at the maximum discount. This maximum discount is predetermined for each group and should not go beyond 40% of chit value.

The maximum bid limit varies between 25 % to 40 % depending on the duration of the chit. In addition, 5 % of the chit value is the company’s commission and the balance percentage is distributed as dividends equally among the members in the Group. The member pays the next installment minus the dividend and the dividend amount is credited to his account.

When there are more members for maximum discount their tokens are put in a box and one token is picked by the way of lottery. The member who holds the ticket that is marked on the picked up token is declared as successful bidder who has to submit the required sureties depending on the future liability.

When there are no maximum bid offers in the auction members can participate in open bidding during the auction time. When there is no maximum discount bidding members are supposed to participate in open bidding during auction time, which starts minimum 5% of chit value or any bid offer that has been given by a member prior to auction time. Members are supposed to bid in multiple of 100 from the minimum bid offer amount and the person who quotes the highest bid amount on the completion of 5th minute shall be declared the successful bidder by the foremen.

 

If there are no offers above the bid offer the member who has given the highest amount as bid offer is declared as successful bidder. Bid offer is to be given to the office 24 hours prior to the day of auction in which one can mention the maximum bid amount that is acceptable to them. If a member is unable to participate in the auction the member can authorize some other person whose signatures have to be authenticated by the member. Generally member authorizes the family member or Development officer’s and Agents as proxies to participate in the auctions.

12. WHAT ARE THE MODES OF PAYMENTS?
A member / subscriber can make payments either by cash, cheques, demand drafts, wire-transfer (NEFT / RTGS / internet banking), ECS and card-payments (debit card / credit card)

13. WHEN CAN I PARTICIPATE IN THE AUCTION?
Any member who has made the payments up to date can participate in auction. If paid by cheque, it should have been realized before the auction date. A defaulter whose payment is not up to date before auction is not eligible to participate in the auction before the auction date.

14. WHAT IS THE PURPOSE OF BIDDING?
In every chit group some members who are in need of money will be participating in the auction for bidding. The purpose of bidding is to declare the successful bidder who gives the highest bid amount (Not exceeding maximum limit) within specified auction time. i.e 15 minutes.

15. WHAT ARE THE SURETIES TO BE SUBMITTED AFTER TAKING THE CHIT?
A member can give sureties depending on the liability of the chit. Following are the sureties generally submitted by the members:

Personal surety: Any salaried person working in State / Central Government / Public Limited Companies / Banks and other Reputed Companies will be taken as surety.

Pledge: Deposits with the company in chits or otherwise, net paid amount of which, after deducting foreman’s commission should be less than 1/3rd of successful bidder’s liability to the company.

Bank Guarantee: Guarantee given by the Schedule Bank in a schedule format can be submitted as surety.

Income Tax Assessor: Any person having IT Assessment for the past three years having business, profession etc., will be taken as sureties.

Property Pledge: Deposit of tittle deeds of urban property can be submitted as surety. Third party property can also be given as surety.

16. HOW MANY SURETIES ARE TO BE SUBMITTED?
Normally a minimum of three sureties or guarantors other than family members are insisted upon. The basic salary or taxable income of all such sureties or guarantors should not be less than 20% of the chit’s future liability.

17. HOW SOON THE PAYMENT WILL BE MADE ONCE THE CHIT IS BID?
Once a member is declared successful bidder it is his responsibility to provide satisfactory sureties / guarantors based on the future liability as specified in the byelaws. On receipt of the surety form, the liability of the members and the guarantors are verified.

Once the documentation and verification is complete, the document is forwarded to Registered Office, which scrutinizes the document in all aspects, and if the document is found to be satisfactory payment is released to the Subscriber.

Members who make regular payments and those who submit the required documents immediately will have the greatest opportunity to receive the fastest payment.