What are Five Different Types of Chit Funds?

Chit fund Definition

Chit funds are defined as a superb kind of investment fund that operates in India as one part of the unsystematic cash advertising business.

What is a Chit fund Company?

Moreover, Chit fund companies provide access to investment and borrowings for individuals with forced access to managing account offices. Thus, chit stores are controlled by the chit Fund firms, these firms are operated by some set of chit fund works. we have a tendency to tend to require a look at a chit to subsidize organizations, chit finance created steps, and chit finance business enlistment in India.

Chit fund Act 1982

However, the chit fund business in India is managed under the Chit Funds Act, 1982. per the Act, a “Chit” implies an exchange whether referred to as chit, chit finance, or another name by or beneath that an individual goes into synchronizing with a planned kind of people. among which every one of them can buy in a specific total of cash (or a specific amount rather) by technique for periodical elements over a clear period which every such support can, in his turn, as controlled by half or by sale or by delicate or in such completely different manner as can be determined in the account understanding, be qualified for the prize total. This act was created by important rules like chit registration, chit auction, bidding percentage, dividend distribution etc,... these are compulsory and should be maintained by the foreman of that particular chit fund company.

What are the needs of chit Funds?  

 Chit funds address the following needs:  

  •   Consumption
  •   Emergency
  •   Investment  
  •   Business
  •   Saving

Features of chit Funds  

  The Six features of chit funds you wish to know before investment are as follows 

  1.   They are credit and savings schemes rolled into one.  
  2.   They act as microfinance institutions.  
  3.   They have a planned worth and period.  
  4.   They allow you to borrow at a rate of interest but moneylenders.  
  5.   They are best for meeting the financial desires of people happy in lower-income households.  
  6.   The deposits created by all the subscribers are turned into a payment.

Five Different Types of ChitFunds  

  There are five different types of Chit funds as follows:  

  1.   Registered Chit Funds  
  2.   Unregistered Chit Funds  
  3.   Digital Chit Funds  
  4.   Organized Chit Funds  
  5.   Special Purpose Chit Funds 

Registered Chit Funds  

Registered chit Funds: Registered chit funds are people who are registered with the Registrar of companies' Societies and Chits. The Reserve Bank of India regulates these forms of chit funds with the Chit Funds Act, 1982 which can apply across all states in India.  

For Example, 

margadarsi chit fund: It was started in the year 1962 in the month of October by one of the Telugu states legendary Businesses man Ramoji Rao, who comes under the Margadarsi group of companies. for more click margadarsi chit fund.

shriram chits: Shriram chits started in the year 1974, founded by  R. Thyagarajan, and comes under Shriram Financial Services Group. for more click  Shriram chits.

kapil chits : Kapil Chits started in the year 1981, by Mr. K. Vaman Rao, in the name of kapil chit funds private limited. for more click  kapil chits

gokulam chits : Gokulam Chits started in the year 1968 23rd July by. A.M. Gopalan, in the name of Sree Gokulam Chit & Finance Co. Pvt. Ltd. for more click gokulam chits.

balussery chits: Balussery Chit Fund Company operating since 1947, under the name of Balussery Benefit Chit Fund Pvt. Ltd. for more click balussery chits.

Unregistered chit Funds:  

Unregistered chit funds are investment instruments for saving schemes that are used by friends, family, or colleagues. This type of chit fund is taken under consideration as riskier than registered chit funds.  

Digital Chit Funds: 

Due to digitalization, chit funds are developed and are running online. These types of chit funds have online transactional options. The subscribers can produce their monthly contributions online and also receive their money through online modes. throughout this type, each subscriber should produce an online account through which he/she can manage and flow into chit funds. One of the best digital Chit funds Company

For Example,

ksfe chitty : KSFE stands for Kerala State Financial Enterprise limited & was formed in the year 1969 on November 6th, Headquartered at Thrissur. for more click ksfe chitty

Organized Chit Funds:  

Very usual in North India, Organised chit funds all the members gather on a monthly or weekly basis. The names of all the members are written on small paper slips and picked up in a tiny box. The person responsible for the group picks up a paper supply in front of all the group members. The name picked up gets the complete collection of funds. The concern name is then takeout from the box. For the following meeting, though the member’s name will not be elected over again, he/she should be present and contribute their share of the money.  

for example,  t chitschit monks, etc,...

Special Purpose Chit Funds:

Special purpose account funds are organized to save lots for a particular purpose. for example, a group of neighbourhood women could group on to rearrange a saving theme for Dasara sweets. This Dasara sweets fund would have an end date, which is often one week before Dasara. The fund collected is used to buy for and prepare sweets in bulk. The prepared sweets are then distributed among all the members throughout Dasara. Special purpose chit funds cut back the price and conjointly the effort.

for example,  ksfe chitty, t chits, Sreekarayil, etc,...

Also read: What is a Chit fund?