Got questions? This way.

• Savings: Chit funds provide a disciplined savings mechanism where individuals can contribute fixed amounts regularly. This helps in cultivating a habit of saving and building a corpus over time.
• Investment and a Borrowing Tool: In chit funds, when you pay the monthly installment, you invest that money and when you win the auction, you borrow against the subsequent installments (future savings).
• Access to Funds: Participants in a chit fund have the opportunity to access a lump sum of money through the auction or lottery system. This can be beneficial for those who need funds for various purposes such as emergencies, education, starting a business or making investments.
• No Interest Payments: Unlike traditional loans or credit options, the rate of interest is much lower on the funds received.
• Flexibility: Chit funds offer flexibility in terms of the amount of contribution and the duration of the scheme. Participants can choose the chit value and the duration that suits their financial goals and requirements.
• Risk Distribution: The collective nature of chit funds spreads the risk among the participants. Each member has an equal chance of receiving the chit value, ensuring fairness and equal opportunity for all.
• Potential for Returns: Chit funds often provide an opportunity for participants to earn returns beyond their contributions. If participants win the bid for the chit value early in the scheme, they can benefit from the surplus funds contributed by other members. There will be a compulsory saving which will earn dividends every month. Even if you claim in the last month, the total dividends earned will be more than the bank interest rate.
• Tax Free Dividends: From the tax point of view, while the overall income is subject to income tax, the dividends earned per month are neither taxable nor tax deductible. Any losses can be claimed as business losses.
• Trust and Transparency: Regulated and authorized chit fund companies, like Margadarsi, provide a high level of trust and transparency in the operations. Participants can rely on the professionalism and expertise of the chit fund organizers in managing the scheme effectively.
• Social Connection: Chit funds often create a sense of community and social bonding among the participants. Members interact and engage with each other during the meetings and auction process, fostering a sense of camaraderie and support.
• Level Playing Field: To some extent, chit funds level the playing field by providing access to money for financially excluded communities.

A chit is a mutually beneficial scheme where a group of people contribute towards the chit value.

• Each month, a member from the group is selected as the prized subscriber, receiving the prize amount.
• Dividends are distributed among the remaining members.
• The maximum bid allowed is 40% of the chit value.
• The company receives a 5% commission, and the rest of the discount amount is distributed equally among the members.
• Dividends earned represent the interest on members' installment payments.
• Non-Prized Subscribers whose payments are up to date can participate in the auctions.
• Successful Bidders must provide required sureties based on future chit liability.
• Monthly installments must be paid by the prized subscriber until the termination of the chit.
• If there are no bidders, the auction is decided by lot among Non-Prized Subscribers.
• The dividend accrued over 50 months is the return on investment for monthly subscriptions made by members.

• Members can make payments either by cash, Demand Draft, or checks. Third-party checks are not acceptable. Issued checks must be cleared before the auction date for a member to be eligible to participate in the auction.
• Online Payment Facility: Pay online directly from your Bank Account through Net Banking on our website. For details, visit our website "www.jeevanshakti.in".
• ECS Facility: An authorization mandate is sufficient to allow us to debit your Bank Account every month for chit installments. For details, please contact any of our branches.

A member can participate in the auction starting from the very first auction, provided that their payments are up to date. If payment is made by cheque, it must be cleared before the auction date. A defaulter, whose payments are not up to date before the auction, is not eligible to take part in the auction.

In each chit group, certain members will require funds. Therefore, all members in need of funds will participate in the auction for bidding. The objective of bidding is to determine the successful bidder who places the highest bid amount (which must not exceed the maximum limit) within the designated auction duration of 5 minutes.

The dividends earned in a chit are not subject to taxation. If you intend to declare the bid amount as a loss, then these dividends must be presented as revenue income during the assessment. As a result, the entirety of the dividend earned in a chit is exempt from taxation if you choose not to declare the bid amount as a loss.

A member can provide sureties based on the future liability of the chit. The following are the sureties typically offered by members:

• Personal Surety: Any salaried individual employed in State/Central Government, Public Limited Companies, Banks, and other Reputed Companies will be accepted as a surety.
• Bank Guarantee: A guarantee provided by a Scheduled Bank in a specified format can be submitted as surety.
• Income Tax Assessor: Any individual with Income Tax assessment records for the previous three years, involving business or a profession, can serve as a surety.
• Property Pledge: Depositing title deeds of urban property can be presented as surety. Third-party property can also be used as surety.

Once a member is declared a successful bidder, it becomes their responsibility to provide satisfactory sureties or guarantors based on the future liability as specified in the bylaws. Upon receiving the surety form, the Branch forwards it to the Corporate Office for a Guarantor search. The liabilities of both the member and the guarantors are verified. If the guarantors are deemed acceptable, the form is returned to the Branch for documentation. The Branch is responsible for preparing the required documents, which primarily include the guarantor bond and promissory note, along with other necessary requirements depending on the type of sureties submitted.

Once the documentation and verification processes are complete, the documents are forwarded to the Corporate Office. The Corporate Office meticulously reviews the documents, and if they are found to be satisfactory, payment is released within 2 days.

In the majority of cases, the entire transaction is completed within 10 days, although this timeframe significantly depends on the type of sureties provided and the documents furnished by the member. Members who make regular payments and promptly submit the required documents will have the best chance of receiving expedited payment.

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 5% 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-

• To obtain the gross chit amount without deducing the discount at the instalment specified in the chit agreement.
• To entitle 5% of gross chit amount as may be fixed in the chit agreement by way of commission or remuneration for meeting the expenses for running the chit.
• To collect interest and penalty, if any, payable on any default in the payment instalments under the provisions of the chit agreement.
• To receive and realise all subscriptions from the subscribers and to distribute the prize amounts to the prized subscribers.
• To demand sufficient security from any prized subscriber for the due payment of future subscriptions payable by him.

It is the duty of foreman-

• To be bound to pay the net chit amount to the prized subscriber on furnishing sufficient security for the due payment of future subscriptions.
• To deposit the unpaid net chit amount in a separate account in an approved bank mentioned in the chit agreement where the prized subscriber is unable to draw the net chit amount until the next succeeding auction. To intimate in writing the fact of such deposit and the reasons to the prized subscriber as well as the registrar.
• To distribute a share of discount or dividend among the subscribers by way of adjustment towards the subscriptions payable for the next instalment, in accordance with the chit agreement.