Have questions about how chit funds work? We’ve got you covered.
A chit fund is a simple yet powerful financial tool where a group of individuals come together to both save and borrow money. Each member contributes a fixed amount every month into a common pool—often referred to as the chit value or pot. Every month, an auction takes place. Members can bid for the lowest payout by offering a discount on the total chit value. The member who offers the highest discount wins and receives the remaining amount as prize money. A small portion of the total chit value—typically around 5%—is charged as a service fee (foreman’s commission). The remainder of the discount amount is shared equally among all members as a monthly dividend. This cycle continues until every member has won the prize money.
Yes, Paranthaman Chit Fund Pvt. Ltd. is fully registered and operates under the regulations of the Chit Funds Act, 1982. We are licensed with the appropriate Registrar of Chits, ensuring that our operations are legal and transparent.
Absolutely. Your contributions are handled under strict regulatory supervision. We prioritize transparency, follow well-documented processes, and ensure compliance with all legal norms—so your savings are always secure with us.
Anyone who meets our basic eligibility criteria and completes the necessary KYC (Know Your Customer) formalities can join.
If a member misses a payment, a late fee or penalty may be charged as outlined in the chit agreement. Repeated non-payment can lead to removal from the group and legal steps may be taken to protect the interests of other participants.
Once you’ve won a bid, and provided all your documents and compliance requirements are in place, your prize amount is disbursed quickly and securely.
Chit dividends may be taxable depending on your overall income and financial situation. It’s best to consult a tax advisor.
The Foreman is the company or organizer that manages the chit fund. At Paranthaman Chit Funds, we take on this role—facilitating auctions, collecting installments, ensuring legal compliance, and distributing funds.
Our monthly auctions are conducted in a transparent manner, either at our office or through secure digital platforms (depending on feasibility). Notifications are sent in advance.