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.
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.