How Chit Fund Works?

How Chit Fund Works?

Many of us must have heard or have an impression how chits work informally from the instances we have seen with our common friends or a neighbour from the community. Let’s make a detailed effort as to understand how chit actually works. It’s a simple concept. To make it further simple, we at IBG eChits have come up with a very simple example.

Understanding Terms:

Chit Value: If a new chit group is announced for 1 lakh rupees over a time 25 months, this amount is defined as chit value.

Chit Period: In the above example the time over which the chit group stays active is termed as chit value. It is 25 months in this case.

Subscribers: For 1 lakh chit group, the chit company needs to gather 25 people. The number of people in a chit group are termed as subscribers.

Foreman: The chit company that runs a chit scheme is termed as foreman. In our case it is IBG eChits.

Process:The infographic below explains the process involved with an example.

This is how a chit fund works. Remember to choose a registered chit fund like IBG eChits.

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