Frequently asked questions
Chit Fund is an age-old traditional way of funding (by periodic turn) a member of a
group of like-minded individuals who agree to meet for a predetermined period and
frequency to save and avail the funds together - a form of combined peer-to-peer
pooling and peer to-peer financing, known internationally as ROSCA (Rotating
Savings & Credit Association) model.
A person who joins a chit fund is compelled to set aside a tiny portion of his income
to cover investments or other anticipated or unforeseen expenses. Chit is a hybrid
product covering both investment and a loan. In an emergency, borrowing money
from the chit fund is significantly simpler, quicker, and less expensive compared to
loans from Banks. The return, a subscriber receives, in the form of chit dividends is
significantly bigger if they decide to save until the very end. There is no TDS in chits.
Yes. Rs.500/- will be charged during customer onboarding and it is a one-time non-
refundable fee. The on boarding fee covers expenses in connection with KYC and
address verification.
If a prized subscriber defaults an instalment, the dividend eligible for the particular
instalment shall be forfeited and he shall be charged @12% pa on the default
amount for the default period. In addition, the defaulter has to face legal action.
If a non-prized subscriber defaults, he will be charged @ 12%pa on the instalment amount for the default period. If it is more than one instalment, the ticket will be substituted by Foreman or a new subscriber. If it is substituted by a new subscriber the aggregate balance in the account of the defaulter shall be refunded after deducting an interest of 12%p a for the period of default. If it is substituted by Foreman, the defaulter shall get the balance in his account only on termination of the chit after deducting foreman commission as applicable.
If a non-prized subscriber defaults, he will be charged @ 12%pa on the instalment amount for the default period. If it is more than one instalment, the ticket will be substituted by Foreman or a new subscriber. If it is substituted by a new subscriber the aggregate balance in the account of the defaulter shall be refunded after deducting an interest of 12%p a for the period of default. If it is substituted by Foreman, the defaulter shall get the balance in his account only on termination of the chit after deducting foreman commission as applicable.
Chit is a mutually beneficial scheme where in a group of people contribute towards
the chit value and one member from the group is given the prize amount and the
dividends are distributed equally among all members. For example, if we consider a
chit value of Rs.500000/- with 50 members in the group, each member has to
contribute Rs.10000/- where by (50X10000) Rs.500000/- is collected.
Auction is conducted periodically in which the needy members participate and the person who discounts the maximum is declared as the prized subscriber. If there are more than one participant for maximum discount, the Successful Bidder will be determined by way of lottery. In traditional set up (where there is no automated process) the tokens bearing the numbers allotted to the needy participants are put into a box and one token is drawn by any of the participants present in the auction and thus, the participant whose number is mentioned on the drawn token will be declared as the successful bidder. In an automated environment, the above process is captured digitally in the system (as in the case of RK Chits).
30% is the maximum bid allowed, which means a person foregoes Rs.150000/- and the balance Rs.350000/- is paid to the prized subscribers. Out of 30%, discount @5% goes to the company(foreman) as commission for conducting the chit and balance of the discount amount is distributed equally amongst all members of the group. That is, 25 % is distributed equally among all the 50 members and each member gets Rs 2500/- as dividend. Thus, each member has to contribute (Rs.10000 - Rs.2500) = Rs.7500/- only.
Auction is conducted periodically in which the needy members participate and the person who discounts the maximum is declared as the prized subscriber. If there are more than one participant for maximum discount, the Successful Bidder will be determined by way of lottery. In traditional set up (where there is no automated process) the tokens bearing the numbers allotted to the needy participants are put into a box and one token is drawn by any of the participants present in the auction and thus, the participant whose number is mentioned on the drawn token will be declared as the successful bidder. In an automated environment, the above process is captured digitally in the system (as in the case of RK Chits).
30% is the maximum bid allowed, which means a person foregoes Rs.150000/- and the balance Rs.350000/- is paid to the prized subscribers. Out of 30%, discount @5% goes to the company(foreman) as commission for conducting the chit and balance of the discount amount is distributed equally amongst all members of the group. That is, 25 % is distributed equally among all the 50 members and each member gets Rs 2500/- as dividend. Thus, each member has to contribute (Rs.10000 - Rs.2500) = Rs.7500/- only.
RK Chits has a history of 36 years of service and an impeccable record of its
operation during this period. Mr.P.S.Premanandan, the Chairman, has built in a
system to administer this financial concept in a way that ensures maximum benefit to
a customer.
RK Chits has a subscriber base of over 15000 as of now. A large number of subscribers are our long-standing repeat-customers who have been with RK Chits for the last 30 years. RK Chit's customer profile reveals customers from different walks of like viz Doctors, Engineers, Chartered Accountants, Advocates, school/college teachers, Government employees, small traders, hotel owners and skilled/semi-skilled professionals.
We ensure proper sureties/guarantors for the future liability of a prized subscriber since we know that the interests of the Non-Prized Subscribers also need to be protected.
The transparency in operation, speedy delivery of service, faster and polite responses and ease of operations at RK Chits give high comfort level to our customers. The business turn-over for the previous year was @ over Rs24 cr.
We believe that a foreman’s success depends on transparency, speedy delivery, ease of operation, accuracy of transactions and large volume of chit transactions. It is in this context, RK Chits decided to go for BPR (Business Process Reengineering) and now have fully automated its chit operations from end to end. Thus, RK Chits has adopted a robust software which is not only scalable but covers all aspects of chit operations while giving maximum focus on regulatory compliance. Customers get high level of comfort enjoying faster response, maximum ease of operation, full trust, complete accuracy and speedy delivery. Added to this, are the easily doable conditions and polite approach on the part of RK Chits.
RK Chits has a subscriber base of over 15000 as of now. A large number of subscribers are our long-standing repeat-customers who have been with RK Chits for the last 30 years. RK Chit's customer profile reveals customers from different walks of like viz Doctors, Engineers, Chartered Accountants, Advocates, school/college teachers, Government employees, small traders, hotel owners and skilled/semi-skilled professionals.
We ensure proper sureties/guarantors for the future liability of a prized subscriber since we know that the interests of the Non-Prized Subscribers also need to be protected.
The transparency in operation, speedy delivery of service, faster and polite responses and ease of operations at RK Chits give high comfort level to our customers. The business turn-over for the previous year was @ over Rs24 cr.
We believe that a foreman’s success depends on transparency, speedy delivery, ease of operation, accuracy of transactions and large volume of chit transactions. It is in this context, RK Chits decided to go for BPR (Business Process Reengineering) and now have fully automated its chit operations from end to end. Thus, RK Chits has adopted a robust software which is not only scalable but covers all aspects of chit operations while giving maximum focus on regulatory compliance. Customers get high level of comfort enjoying faster response, maximum ease of operation, full trust, complete accuracy and speedy delivery. Added to this, are the easily doable conditions and polite approach on the part of RK Chits.
RK Chits has a wide range of chit groups which covers people from all walks of life -
Individuals, Employees, Professionals, Agriculturists, Land Lords, Proprietary/
Partnership firms, Companies, Corporate offices, Organization etc. It has a wide
range of Chit values starting from Rs.100000/- to a maximum range of
Rs.40,00,000/-.
- RK Chits has a wide range of monthly chits with duration starting from 20 months to 60 months.
- RK Chits offers weekly chits as well, the target population being small traders/individuals with daily collection facility digitally.
- RK Chits offers Institutional Chits to employees of one single company/organization for various durations.
- RK Chits offers fixed dividend weekly chits to small traders/individuals.
While availing the prize money, the subscriber may offer any of the following
securities to the satisfaction of RK Chit:
- Gold (18 carat and above): The future liability should be below 75% of the market value of gold
- Non-Prized Chit (NPC): The future liability should be below 95% of balance in the NPC
- LIC Policy: The future liability should be below 95% of the surrender value of the Policy (Market Linked Policies are not acceptable)
- Unencumbered Land & Building: The future liability should be below 50% of the market value of the asset
- Fixed Deposit of Scheduled commercial Banks: The future liability shall be below 95% of the face value of the bank fixed deposit
- Bonds/Debentures of Group Firms: The future liability shall be below 95% of the face value of the bond/debenture
- Bank guarantee from scheduled commercial bank: The future liability shall be below 95% of the guaranteed amount
- Salary certificate &Personal guarantee: Authenticated Salary certificate of
employees of state govt or scheduled commercial banks, public sector
companies, govt schools, Acknowledged ITR of professionals viz doctors,
engineers and architects. Monthly income should cover 3 times the instalment
amount.
Additionally, personal guarantee of two more persons required. Second guarantor should be a govt employee or a staff member from scheduled commercial bank. Verified Salary certificate to be taken. The third personal guarantee should be from a close relative viz father, mother, sibling, son, daughter. - Chit Security Receipt: The auction winner may place the Prize amount with RK Chits as security for the future liability to earn 10% return on the security. The security shall be released and returned to the subscriber on termination of the chit.