Definition
A chit fund is a unique financial instrument that serves both as a savings scheme and a credit facility at the same time. A group of individuals — known as subscribers — come together and contribute a fixed amount every month for a predetermined period. The total pooled amount each month is auctioned among the members, and the person who bids the lowest discount receives the lump sum.
Chit funds are regulated by the Chit Fund Act, 1982, and governed by respective state governments, making them a legally protected and transparent financial instrument. Unlike fixed deposits or mutual funds, chit funds give you access to the full corpus of savings long before your own contributions add up to that amount — making it a powerful tool for both saving and borrowing.
Purpose
Chit funds combine the discipline of saving with the flexibility of borrowing — giving every member the best of both financial worlds.
Monthly contributions create a structured savings habit, ensuring you consistently build wealth over the chit tenure without skipping.
Access the full chit corpus without paying any interest — unlike bank loans that charge heavy interest rates every month.
The discount amount earned through the bidding process is distributed as dividend to all members — completely tax free.
Chit funds consistently deliver returns higher than traditional savings accounts and fixed deposits, maximising every rupee saved.
Fully governed by the Chit Fund Act and state authorities — your investment is legally secured and completely transparent at all times.
Built on trust and mutual support — every member benefits from the collective pooling of resources within a regulated community group.
Process
A simple and transparent process that benefits every subscriber — from enrollment to final payout in clear structured steps.
A fixed number of subscribers join a chit group — each agreeing to contribute a fixed monthly amount. The total number of members equals the number of months in the chit tenure. All members sign a legally binding chit agreement at enrollment.
Every month, all members pay their fixed subscription amount. This pooled total forms the monthly chit amount. A small commission of 5% is deducted for the foreman (chit company), and the balance is made available for auction among the subscribers.
Each month, an open auction is held. Members bid for the right to receive the pooled chit amount. The member who bids the lowest amount wins the auction and receives the prize money. The difference between the full amount and the bid is distributed as dividend to all members.
The winning bidder receives the prize amount — which is the full chit value minus the bid discount and foreman commission. Once a member wins the auction, they continue to pay monthly contributions for the remainder of the chit tenure without being eligible to bid again.
At the end of the tenure, every member would have either already received the chit prize amount or will receive the balance amount. Members who did not bid throughout the tenure receive the full prize money at the final auction — completing the chit cycle successfully.
Advantages
At Senthil Gnanavel Chit Fund, every member gets more than just financial returns — they get security, flexibility, and community.
Join any of our chit schemes without paying any joining or entrance fees. Zero hidden charges — ever.
Every subscriber receives tax-free dividend benefits on their chit subscription, boosting overall returns.
Hassle-free fund access whenever needed. No lengthy paperwork, no unnecessary delays in processing.
Our commission is only 5% of the chit value — one of the lowest in the industry, maximising your returns.
Open auction process ensures every member gets a fair and equal chance to access the chit fund amount.
Fully registered under the Chit Fund Act with complete government regulation and legal protection.
Consistently higher returns than fixed deposits and savings accounts — your money grows faster with us.
Our expert team guides you from enrollment to final payout — always available to answer your queries.
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