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Any person under the Act responsible for the conduct of the chit and includes any Person, such as branch manager, discharging his functions.
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.
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.
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.
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.
A Chit fund is a kind of savings scheme practiced in India. A chit fund company is a company that manages, conducts, or supervises a chit scheme—as defined in Section of the Chit Funds Act, 1982.
Lathana Chits (India) Pvt. Ltd. is registered chit fund company regulated by the Government of India under Section of the Chit Funds Act, 1982. A registered Chit Fund Company makes a security deposit of a sum equal to 100% of the chit value into a Nationalised Bank as FDR, which is pledged in favour of the Registrar of Chits. A Chit Fund cannot be started unless this deposit is made. Therefore, as a participant in a registered Chit Fund Company you can be rest assured that your investments are secure.
Chit fund is the only financial instrument that allows customers to save and borrow from their own funds.Chit funds are one of the traditional mode of investments used by households to grow their money. Today, with FDs and RDs offering low interest rates of 5-6%, chit funds have become a much more attractive investment that offer more returns and low borrowing cost.
Joining a Chit fund in Lathana Chits is very easy process. You need to submit your KYC documents copy duly attested along with application form and Chit agreement should be signed to enrol a Chit fund.
Lathana Chits customers can login to the Mobile app to see their chit fund information like dividend history, subscription amount and last payment details
You can make a Chit Instalment through Mobile App or Website using Debit Card, Credit Card, Net Banking, NEFT, UPI, Cash, Cheque and NACH mandate registration.
The basic necessity of conducting a ‘Chitty’ is a group needy people called subscribers. The foreman—the company or person conducting the chitty—brings these people together and conducts the chitty. The foreman is also responsible for collecting the money from subscribers, presiding over the auctions, and keeping subscriber records. He is compensated by a fixed amount (generally 5% of gross chitty amount) monthly for his efforts. Other than that, the foreman has no specific privileges, he is just a chitty subscriber. A simple formula depicts the pattern of the chitty:
Monthly Premium x Duration in Months = Gross Amount
E.g., 5000 * 20 = 1,00,000/- Where 5000 is the maximum monthly contribution needed from a subscriber, 20 is the duration of the chitty in months and 1,00,000 is the maximum sum assured. The duration also equals the number of subscribers, as there must be (not more or less) one subscriber to receive the price money every month.
The chitty starts on an announced date, every subscriber come together for the auction/lot. When there are more than one person willing to take this minimum sum, lot are conducted and the ‘Lucky subscriber’ get the prize money for the month. If there is no person willing to take the minimum sum, then a reverse auction is conducted where subscribers open-bid for lower amounts; that is from 1,00,000 >> 90,000 >> 75,000, and so on. The person bidding lowest sum get bid amount.
In both the cases the auction discount, that is the difference between the gross sum and auction amount, is equally distributed among subscribers or is deducted from their monthly premium. For example if the auction is settled on a sum of 75,000, then the auction discount of 25,000 (1,00,000 – 75,000) is divided by 20 (the total number of subscribers) and every one gets a discount of 1000. The same practice is repeated every month and every subscriber gets a chance of receiving some money.
CHIT provides a good source of finance for different type of people viz., small investors, businessmen, small scale industrialists etc.
A Chit is the Only Financial Product that allows you to Save and Borrow.
The non prized subscriber who is a saving member up to the last installments gets dividend which is comparatively
higher than the interest that are accrued by way of Recurring Deposit Schemes.
The purpose of drawing the prized amount need not be disclosed. It can be used for any need by the member
A Chit fund is a kind of savings scheme practiced in India. A chit fund company is a company that manages, conducts, or supervises a chit scheme—as defined in Section of the Chit Funds Act, 1982.
“Chit means a transaction whether called chit, chit fund, chitty, kuree or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical installments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount”
Share of discount is the portion of the discount amount available, which is the quantum of the amount that a subscriber forgoes in a draw in order to get the prize amount. In the quantum of discount, the foreman retains the commission, and the balance amount is distributed proportionately among all the subscribers at each instalment of the chit.
Bidding is nothing but a discount, which is a quantum of the amount that a subscriber forgoes in a draw in order to get the prize amount. The subscribers forego the highest discount during the prescribed time limit within the ceiling fixed by the Chit Funds Act, 1982, i.e. 40%.
In the event that no bidder is forthcoming in an auction, a lot will be drawn from the non-prized subscribers at the close of the prescribed time (i.e. 5 minutes), and the subscriber drawn will be declared as a prized subscriber. He will be entitled to receive the gross chit amount for his ticket less the foreman commission.
A Prized Subscriber means a subscriber who has either received or is entitled to receive the net chit amount. The prized subscriber who draws the net chit amount shall pay the Foreman the amount due for his ticket for each instalment on or before the due date of each such auction.
The prized subscriber who is entitled to receive the net chit amount must furnish necessary security or sureties to the satisfaction of the foreman for due payment of future subscriptions to draw the net chit amount.
In a Chit Fund Organisation, auctions play a vital role, which is crucial for identifying the prized subscriber in each auction. The subscriber who is to get the prize amount at any instalment shall be determined by a lot or by an auction at the place and time mentioned in the chit agreement. The time allowed for the auction is 5 minutes from the commencement of the proceedings. The proceedings will be regulated by the foreman, and in case of a dispute, the decision of the foreman is final.
The prime eligibility for subscribers to participate in an auction is to make up-to-date payments. The subscribers can submit written bid offers stating the maximum amount of discount they are willing to forego, which must be received by the foreman at least one day before the concerned auction, and it can be withdrawn only 24 hours before the auction time. Only subscribers or their authorised persons/proxies will be allowed to take part in the auction. Such authorisations shall be in writing.
The auction shall start from a foreman’s commission of 7% of the chit value, and bidders may, in the auction, raise a discount to the maximum of 25/30/35/40 per cent of the chit value, which is mentioned in the chit agreement. Each time, the bid shall be raised by rupees hundred or multiples thereof.
The non-prized subscriber who bids at the highest discount, not exceeding the specified maximum discount, will be declared as the prized subscriber. If there is more than one bidder for the maximum discount, the auction will be decided by lot among such bidders.
The foreman is a representative of the Chit Fund Company to operate the chit and is duly authorised by such a company. A number of authorised representatives authorised by the company can act as foremen depending on the requirement.
Among various rights and duties of the foreman, the following are crucial for the proper conducting of the chit.
It is the Right of the Foreman-
It is the duty of foreman-
Once a person wins an auction, they are excluded from participating in future auctions but are still required to contribute their share. In the event that no bids are placed during a particular month, the entire amount becomes available for a lucky draw or lottery. Through a lucky dip, one member is declared the winner of the funds.
Bidding means that the member agrees to forego some part of the money in order to claim the bid amount. The lowest bidder, i.e. the one who is ready to forego the most subject to a ceiling, gets the amount. The Chit Funds Act of 1982 establishes a maximum ceiling of 40% on the amount that a member can forgo.
‘Dividend’ refers to the portion of the discount amount available under the chit agreement that is distributed proportionately among the subscribers at each instalment of the chit.
