How Chit Fund Works with Example?
In a Chit Fund Scheme, a Group of People Contribute Periodically Towards the Chit Value for a Duration Equal to the Number of Investors (Members or...
In a chit fund scheme, a group of people contribute periodically towards the chit value for a duration equal to the number of investors (members or subscribers). The amount collected is given to the person, who is either selected through a lucky draw (lottery system) or an auction.
How do you calculate chit?
Amount collected per month = 20*1000 = Rs. 20, 000 – this is known as the Chit Amount. Once the first month's payment is received, bids are invited from all subscribers. Any subscriber, who is in need of money, can bid for the chit amount, at a lower amount than it.
How do chit funds make money?
A savings-cum-loan scheme in which a number of contributors come together to invest a fixed sum every month. The money is collected from the chit group and is put up for auction every month. The investor who bids the lowest for the total sum will win the lot.
Alexander Ross has covered the video game industry for a decade, writing deep dives on game design, esports tournaments, VR developments, and gaming culture.
