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GENERAL QUESTIONS
Consider a new chit group that is commencing.
The value of the chit is Rs. 10,00,000. This amount
is known as the Chit Value.
Duration of the chit to be 50 months. This is known as term period of the chit group. The Foreman has to gather 50 people who are interested in investing in this chit group. These are Subscribers.
Once the chit group commences, the foreman has to register the chit with the registrar of chits He has to deposit 100% of the chit value as security. And he should get Commencement Certificate from the registrar to start the chit. The amount to be saved every month by the Subscriber is Chit value/No of person's i.e. Rs. 10,00,000/50 = Rs. 20,000. This is also known as Monthly Subscription. It may be noted here that the number of persons investing in a chit and the duration of the chit is always the same. The maximum monthly contribution or Subscription Amount that a Subscriber will pay is Rs. 20,000. The Subscriber does not always pay the entire Subscription amount every month. Let us find out how and why he does not have to pay the entire amount.
The maximum discount or maximum bid permitted in our company is 30%. 30% of Rs. 10,00,00o is Rs. 3,00,000. This amount is known as Chit Discount.
The foreman charges 5% of chit value as commission. This is deducted from Chit Discount 1.e. Rs. 3,00,000- Rs. 50,000 Rs. 2,50,000. This amount is equally distributed among the subscribers as dividends. i,e. Rs. 2,50,000/50 = Rs.5,000.
In the following month, all subscribers would have to only pay Rs. 15,000 instead of Rs. 20,000. This is because they have earned a chit dividend of Rs.5,000.
Depending upon the competition within the chit group the discount percent would vary. The least discount would be 5% which is the foreman's commission.
Duration of the chit to be 50 months. This is known as term period of the chit group. The Foreman has to gather 50 people who are interested in investing in this chit group. These are Subscribers.
Once the chit group commences, the foreman has to register the chit with the registrar of chits He has to deposit 100% of the chit value as security. And he should get Commencement Certificate from the registrar to start the chit. The amount to be saved every month by the Subscriber is Chit value/No of person's i.e. Rs. 10,00,000/50 = Rs. 20,000. This is also known as Monthly Subscription. It may be noted here that the number of persons investing in a chit and the duration of the chit is always the same. The maximum monthly contribution or Subscription Amount that a Subscriber will pay is Rs. 20,000. The Subscriber does not always pay the entire Subscription amount every month. Let us find out how and why he does not have to pay the entire amount.
The maximum discount or maximum bid permitted in our company is 30%. 30% of Rs. 10,00,00o is Rs. 3,00,000. This amount is known as Chit Discount.
The foreman charges 5% of chit value as commission. This is deducted from Chit Discount 1.e. Rs. 3,00,000- Rs. 50,000 Rs. 2,50,000. This amount is equally distributed among the subscribers as dividends. i,e. Rs. 2,50,000/50 = Rs.5,000.
In the following month, all subscribers would have to only pay Rs. 15,000 instead of Rs. 20,000. This is because they have earned a chit dividend of Rs.5,000.
Depending upon the competition within the chit group the discount percent would vary. The least discount would be 5% which is the foreman's commission.
Pulincha Chits is having various range of chit duration. They are 50 months (Long Term), 40 months (Forty Term), 30 months (Thirty Term), and 25 months (Short Term), groups with 50,40,30 and 25 members respectively forming the group.
A person cannot take more than 2 (Two) chits in a group that too he should have paying capacity for the same.
1. Member can make payments either by cash, Demand Draft or cheques. Third party cheques are not acceptable. Issued cheques have to be realized before the auction date if the member wants to participate in auction.
2. Online Payment Facility : Pay online directly from your Bank Account through Net Banking from our web site.
2. Online Payment Facility : Pay online directly from your Bank Account through Net Banking from our web site.
A Registered Chit Fund Company makes a Security deposit equal to 100% of chit value in a Schedule Bank as FDR, which is pledged in favor of registrar of chits. Therefore, a member in a registered Chit Fund Company is very much secured than a member in a non-registered company.
Auctions are conducted in the branches where in the foremen declares the successful bidder. All non-prized subscribers who have paid their Installments up to date are eligible to participate in the auctions. In case the payment is made by cheque the cheque should have been realised one day before the auction date.For every group the auction time is 5 minutes on a specified date and time. It is upto the members to be present in the auction hall 10 minutes before auction time as verification has to be done by branch for signatures of members and identification of proxies and their Bid Authorization letters.
During the first few months there will be more number of participants willing to bid at the maximum discount. This maximum discount is predetermined for each group and should not go beyond 40 % of Chit value.
The maximum bid limit varies between 30% to 40% depending on the duration of the chit. Out of which 5% of the chit value is the company's commission and the balance percentage is distributed as dividends equally among the members in the group. The member pays the next installment minus the dividend and the dividend amount is credited to his account.
When there are more members for maximum discount their tokens are put in a box and one token is picked by way of lottery. The member who holds the ticket that is marked on the picked up token is declared as successful bidder who has to submit the required sureties depending on the Future Liability.
When there are no maximum bid offers in the auction members can participate in open bidding during the auction time. When there are no maximum discount bidding members are supposed to participate in open bidding during auction time, which starts with a minimum 5% of chit value or any bid offer that has been given by a member prior to auction time. Members are supposed to bid in multiples of Rs.100/- from the minimum bid offer amount and the person who quotes the highest bid amount on the completion of 5th minute shall be declared the successful bidder by the foremen.
If there are no offers above the bid offer the member who has given the highest amount as bid offer is declared as successful bidder. Bid offer is to be given to the office 24 hours prior to the day of auction in which one can mention the maximum bid amount that is acceptable to them. If a member is unable to participate in the auction the member can authorize some other person whose signatures has to be authenticated by the member. Generally member authorizes the family member or Development Officer's and Agents as proxies to participate in the auctions.
During the first few months there will be more number of participants willing to bid at the maximum discount. This maximum discount is predetermined for each group and should not go beyond 40 % of Chit value.
The maximum bid limit varies between 30% to 40% depending on the duration of the chit. Out of which 5% of the chit value is the company's commission and the balance percentage is distributed as dividends equally among the members in the group. The member pays the next installment minus the dividend and the dividend amount is credited to his account.
When there are more members for maximum discount their tokens are put in a box and one token is picked by way of lottery. The member who holds the ticket that is marked on the picked up token is declared as successful bidder who has to submit the required sureties depending on the Future Liability.
When there are no maximum bid offers in the auction members can participate in open bidding during the auction time. When there are no maximum discount bidding members are supposed to participate in open bidding during auction time, which starts with a minimum 5% of chit value or any bid offer that has been given by a member prior to auction time. Members are supposed to bid in multiples of Rs.100/- from the minimum bid offer amount and the person who quotes the highest bid amount on the completion of 5th minute shall be declared the successful bidder by the foremen.
If there are no offers above the bid offer the member who has given the highest amount as bid offer is declared as successful bidder. Bid offer is to be given to the office 24 hours prior to the day of auction in which one can mention the maximum bid amount that is acceptable to them. If a member is unable to participate in the auction the member can authorize some other person whose signatures has to be authenticated by the member. Generally member authorizes the family member or Development Officer's and Agents as proxies to participate in the auctions.
A member can participate in auction right from the first auction itself, only if he or she has made the payments up to date. If paid by cheque, it should be realized before the auction date. A defaulter whose payment is not upto date before auction is not eligible to participate in the auction.
In every chit group some members will be in need of money. So all the members who are in need of money will be participating in the auction for bidding. The purpose of bidding is to declare the successful bidder who gives the highest bid amount (Not exceeding maximum limit) within the specified auction time i.e. 5 minutes.
There will be a compulsory saving which will earn dividends every month. Even if you take at the last month, the total dividends earned will be more than the bank interest rate.
The dividends earned in a chit are not taxable. If you want to claim the bid as loss then these dividends has to be shown as revenue income in the assessment. Hence the entire dividend earned in a chit is not taxable if you don't claim the bid amount as loss.