Chit

Chit is a kind of savings scheme practiced in India. In a chit scheme, a specific number of individuals come together to pool a specific amount at periodic intervals. Usually the number of individuals and the number of periods will be same. At the end of each period, there will be an auction of the money. Members of the chit will participate in this auction for the pooled money during that interval. The money will be given to the lowest bidder. The bid amount will be divided by number of members, and thus determining per head contribution during that period. Usually the discount will continue to decrease over periods. The person getting money in the last period will receive the full scheme amount. Such chit fund schemes may be conducted by organised financial institutions or may be unorganised schemes conducted between friends or relatives. There are also variations of chits where the savings are done for a specific purpose. ==History== The chit fund schemes have a long history in the southern states of India. Rural unorganised chit funds may still be spotted in many southern villages. However, organised chit fund companies are now prevalent all over India. ''TBD'' ==Example== Functioning of Chit funds are better explained using an example. Take a typical chit fund with 25 members contributing Rs.100 per week. This fund will run for 25 weeks. On the first week all members will contibute Rs.100. An auction meeting will be conducted, and the foreman of the chit fund will preside over it. The total amount will be Rs.2500. The auction will start with this amount. Bidders will start bidding by discounting this amount. Let us consider that lowest any person bids is Rs.2150 (a discount of Rs.350). This amount (Rs.2150) is given to this winning bidder. Rest of the amount is divided by 25, bringing the discount per person to Rs.14. This discount amount is returned back to each member. Sometimes a part of this may be kept by the foreman as service charges, usually in organised chit funds. ==Organised chit funds== Chit funds in India are governed by various state or central laws, like Travancore Chit Act of 1945, Chit Funds Act, 1982 and Madras Chit Fund Act, 1961. Organised chit fund schemes are required to register with the Registrar or Firms, Societies and Chits. ==Special purpose funds== Some chit funds may be conducted as a savings scheme for specific purpose. An example is the Deepavali sweets fund, which has a specific end date - about a week before Deepavali. Neighbourhood ladies will get together to pool their savings each week. This fund will be used to prepare sweets in bulk just before the Deepavali festival, and the sweets will be distributed to all members. Preparation of Deepavali sweets may be a time consuming and costly activity for individuals. Such a chit will reduce the cost, and relieve the members from excess work from an already tense festival season. Nowadays, such special purpose chits are conducted by jewelery shops, kitchenware shops, etc. to promote their products. ==External links== [http://www.arts.cornell.edu/econ/sklonner/stefan/chits.pdf Understanding Chit Funds] [http://gov.ua.nic.in/society/acts/hchit.htm The Chits Funds Act,1982] Financial services

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Words begining with Chit:

Chit
Chita
Chita,_Aichi
Chita,_Japan
Chita,_Russia
Chital
Chital_Deer
Chitarrone
Chitato
Chitauri
Chita_District,_Aichi
Chita_Oblast
Chita_Province
Chita_Rivera
ChitChat
Chitgar_Park
Chithira_Thirunal_Balarama_Varma
Chitimacha
Chitin
Chitina,_AK
Chitina,_Alaska
Chitina,_Alaska
Chitinase
Chitina_River
Chitinous
Chitinozoa
Chitinozoa
Chitinskaya_Oblast',_Russia
Chitlin
Chitlins
Chitlins
Chiton
Chiton
Chitons
Chitosan
Chitose
Chitose,_Hokkaido
Chitose,_Japan
Chitose,_Oita
Chitose_airport
Chitose_Hajime
Chitose_Institute_of_Science_and_Technology
Chitose_International_Airport
Chito_Martinez
Chitpawan
Chitradurga
Chitrakoot
Chitrakoot_Division
Chitral
Chitral_(district)
Chitral_District
Chitral_district
Chitrapandian
Chitra_Banerjee_Divakaruni
Chitra_Singh
Chitr�
Chittacong
Chittagong
Chittagong
Chittagong_College
Chittagong_Collegiate_School
Chittagong_Division
Chittagong_division
Chittagong_Division_cricketers
Chittagong_Hill_Tracts
Chittagong_University
Chittagong_University_of_Engineering_and_Technology
Chittaranjan_Das
Chittaur
Chittaurgarh
Chittaway_bay
Chitta_Ranjan_Das
Chitta_swara
Chitta_swaras
Chittenango
Chittenango,_New_York
Chittenango_Falls_State_Park
Chittenden
Chittenden,_Vermont
Chittenden,_VT
Chittenden_County
Chittenden_County,_Vermont
Chittenden_County,_Vermont
Chittenden_County,_Vermont
Chittenden_County,_VT
Chittering
Chittering,_Western_Australia
Chitterling
Chitterlings
Chittoe
Chittoor
Chittoor
Chittor
Chittorgarh
Chittur
Chitty
Chitty_Chitty_Bang_Bang
Chitty_Chitty_Bang_Bang
Chitty_Chitty_Bang_Bang_(car)
ChiTumbuka
Chitungwiza