#onlinechit

In India, chit fund scheme has become very popular in recent days. To the delight, it has become the main parts of the unorganised money market industry. A chit fund company provides the users with access to both the savings and borrowings. Chit fund companies with a great story has been paved its pathway right in the chit fund track. Here, we are going to look at the chit fund companies functions, business model and the chit fund business registration in India.

What actually is a chit fund company?

You might have heard the answer for this question in different versions. Any entity that ought to manage a chit fund schemes is a chit fund company. Such companies ought to manage different schemes. Each of the schemes has a set of members with a limited duration. At first, the chit fund companies have to be registered to start a chit fund scheme in their organisation.

In India, chit fund has been an on-growing industry that comes under a valuable saving scheme. According to the Chit Funds Act of 1982, the chit fund companies have been managed, conducted, and regulated.

Though the chit fund companies in India comes under central legislation governance, state government is responsible for their administration. In particular, Tamil Nadu funds were guided by Tamil Nadu Chit funds Act of 1961, Maharashtra Chit Funds Act of 1975 in Maharashtra and in Kerala, Kerala Chitties Act 1975.

In the registration operation, there are processes like floating of chit fund schemes, finding the potential members, enrolling the members into the chit, contribution management, chit auctions, fund distribution and book maintenance. To start with a chit fund company, registration is the prior thing. After registration, try to understand the business model of the chit fund.

All the chit schemes have a time period, contribution, and a set of members. The number of members in the chit will be equal to the time period of the chit scheme. Each member will contribute a fixed amount during every monthly auction.

Chit fund business model

Let us assume a chit fund operation with around 12 members for 12 months with a monthly contribution of 10,000 each. Every month the chit company will collect 1,20,000 rupees from the chit auction. After collecting the amount, less the chit company’s fee and the discount, the remaining will be distributed to the 12 members.

If any person is interested in receiving the auction amount, then he/she is allowed to receive the entire chit amount. If more than one individual needs money at the same month, the one with the lowest bid will be given the amount. Then, the chit discount is evenly spread among the remaining members.

This is the business model of the chit fund company. Many people may not have an idea or out figure relating to the chit funds. Few wish to start a chit fund scheme with their friends and closed ones. It also goes well and good. While going for the chit fund company, know whether the company has been registered properly in order to have a safe chit fund scheme.

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Chit fund is one among the best saving method that indulges in the fixed amount. Every month the subscriber has to pay certain fixed amount. One among the group must conduct the auction and maintain the records. He is called the foreman. He is responsible to make way ahead in maintaining the amount till the maturity month. He also has the benefit of earning 5 percent of the lowest bid amount.

Here is an example to make you understand the working of chit funds easily.

For instance, let us take the person named Candy as one of the subscribers in a monthly chit scheme. Candy has joined in a chit fund scheme along with 9 others. So, totally the chit scheme holds 10 members. Every person has to contribute 10000 rupees each for 10 months leading to 1,00,000 rupees at the year end.

In this case, during the first-month chit auction, Bheem has came up with 1000 rupees. Once the bidding starts, the person who is in need of money can start biding. The person who bids the lowest amount will get the chance of owning the money. Let us see the representation to understand much better.

Monthly amount paid by every subscriber including Bheem = 10000

Bids made in the auction = 9000, 8000

As the lowest bid is 8000, the person will be given the amount of 8000. But, before that there will be an organiser fee deducted from the lowest bid amount.

Fortunately, every chit fund scheme or organizers will take 5 percent of the lowest bid amount. i.e 5 percent of 8000. So, Bheem, the foreman will get an amount of 400 and the rest amount 7600 (8000-40) will be taken by the person.

Apart from the bid amount, remaining 2000 (10000-8000) will be split up to the other members of the scheme. At the end of 10 months, every subscriber will get a bulk amount depending upon the before auctions. 

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Of course, yes! Chit funds in India has been governed by the Chit Fund Act, 1982. Using the act, every chit fund organization has to be regulated and registered by the respective state government. Chit funds have been legal in India including Tamil Nadu, Karnataka, Kerala, Andhra Pradesh, and so on. If chit funds are not believable, people never depend on the chit fund companies available in various places. Many newbies in financial realm has been expecting good returns from the chit funds.

There are many good chit fund companies that provide the best saving and borrowing scheme to the people. In fact, few organizations have indulged in providing chit fund software online. While searching for the best chit fund software, Mazechit pops up in the first result. I hope the software has been useful for many organizations.

Recently, chit fund companies have been increasing rapidly thereby owing many benefits to the people. Only thing to keep in mind is to choose the trustworthy organization to join in chits.

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https://youtu.be/uGMToDS40Z0Many organizations has involved in organizing chit fund groups. Mostly, chit funds occur among family members or friends or neighbours.

Documents required for chit fund company registration

Registering chit funds is mandatory and it requires the following documents.

For every director and member the necessary documents are,

PAN card

ID proof

Bank statement/ Electricity bill/Mobile bill/telephone bill - Any one of these

Other documents as per the chit registrar. If he/she needs some other documents for proof, the member or the director has to produce those documents.

To owe registration for registered address

Ownership document or the rent agreement

Electricity bill

Copy of NOC

After preparing the documents necessary to register the chit fund company, follow these steps.

Apply for Digital signature and DIN number

Apply for Name approval of chit fund company

Prepare for the documents as per chit fund company’s objectives

Minimum capital requirement for chit fund company

Apply for Chit fund company registration

Apply for chit registration with chit registrar

Following these steps, the chit fund registration becomes easier. For a free demo Chit Fund Software Visit: Chit Fund Software Live Demo

For more details reach us at Toll Free: 1800-200-1766/ 7397723052.

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