Concept Of Chits
Concept of Chits
Chits is the unique concept in India and considered as one of the indigenous savings option in the family, for more than a century. Through monthly schemes, investors can purchase assets like cars and houses, and borrowers can use their savings to pay off part or all of their long-term debt. These are all the elements that give this concept more worth. The only financial industry offering that offers both investors and borrowers several rewards.
Schemes
Different schemes are available to cater to the demands of different social classes, including Individuals and HNIs.
The values of the chits span 40, 50, and 60 months and range from Rs. 5.00 Lacs to Rs. 1.00 Crore.
It is an advised that subscribers should decide which chit plan to join based on their financial demands and determine why they are joining it. In addition, the length of the Chit and the monthly allotment of excess funds are important considerations while choosing Chit programs. The advantages of long-term chits are typically superior to those of short-term chits..
Benefits of Chits
The Chit Schemes are tailored to fulfill the needs of the borrower, who is looking for low-cost funding to cover business emergencies, and the investor, who is hoping for a healthy return on investment for their money.
The carefully thought out Chit Schemes that the Investors have chosen can be utilized to finance their children’s marriage and education as well as investments in assets like cars, homes, flats, jewelry, and consumer durables, among other things.
In comparison to bank FD and RD schemes, the return on investment is higher. This is because businessmen are also becoming members of Chit Groups, taking part in the auction and bidding for large discounts for their companies. A higher discount amount results in a higher dividend amount.
As a result, it offers the Investor Class a strong return. Additionally, the cost of raising funds through chit schemes is less than that of borrowing money from any financial institution. There is also a hassle-free documentation process to release the prize money amount, and there are flexible security and surety requirements to cover the obligation in the chit(s).
Why “RSK Chits”?
Awareness creator
Without a doubt, “RSK” takes great satisfaction in the fact that India is credited for popularizing the chit notion. Additionally, it has been demonstrated over time that Chit schemes may be very organized and beneficial to Business areas as well.
In addition to the aforementioned, there are other explanations for why individuals decide to divide their savings with “RSK.” They are listed below:
Transparency in operating system
Every one of our chit schemes is registered with the Registrar of Chits and has permission before any chit group may start. At the time of registering in the Chit scheme, Subscribers receive an explanation of all our functioning procedures.
Every month, all returns are filed with the relevant Chit Authority. The relevant Authority may at any time review our records. Thus, record-keeping transparency is upheld.
Easy Access
We have Branches almost in the Subscribers’ home town itself. It is advantageous, on either way, for easy access to both Subscriber and the Company to get and to provide better Service respectively.
Long term association with People
RSK Chits is a “Household” name in every family. We have been offering our customers financial support for over forty years. By itself, it gives the public great confidence to deposit their hard-earned money with “RSK.”
By meeting their periodic financial needs when they were needed, we were able to reach a large number of happy customers. As a result, we could develop a personal bond with each customer. The public interprets chits as meaning that it is always “RSK” only.
Other Salient Features
- Monthly SMS to Subscribers Registered Mobile Number indicating the Last Bid amount, Share of Subscription and Dividend, etc.,
- Digital payment system
- Instant message confirmation on Registered Mobile for Subscription payment
- Doorstep collection option by Company Authorised Employees
Who can Join Chits?
- Individuals
- Partnership Firms
- Private and Public Limited Companies
- HUF
Common Procedure
Become a Subscriber
The Customers’ can select their nearest Branch and the Scheme, which is suitable for their need.
The Chits are always common in all the Branches except the High Value Groups viz., above Rs.25.00 lacs. Such High Value Chits are floated only in select Branches for Administrative reasons Collect the prescribed Chit Enrollment Form either from the nearest Branch or from Authorised Agents.
The filled Chit Application has to be submitted along with Chit Agreement duly signed by the Subscriber to the Branch, chosen by the Subscriber, by paying the 1st installment amount with Admission Fees either by Cash or Cheque for allotting the preferred Chit Scheme.
On completion of the above said formalities, the Customer will be allotted with a Group and Ticket Number for all reference purpose in future
Bidding procedure
A Welcome Letter will be sent to each and every Group Subscriber, informing them of the first Public Auction of the Chit. All the details regarding the Chit Value, Group No., Ticket No., Auction Date and Time, and the Due Date for Subscription Payment are all included in it. The auction lasts for about five minutes. The maximum bid on a CV is forty percent. The Auction is open to subscribers who are eager to bid on the chit.
In person or by submitting a bid offer beforehand Providing a letter of authorization to the authorized representative.
Types of Auctions
- Open Auction
- By Lot
Open Auction
The Auction Hall is occupied by subscribers in person. The discount amount that each participant wishes to forgo is stated verbally. In the final minute of the auction, the bidder who has succeeded is verified to have received the largest discount amount among all the participants.
By Lot
The Successful Bidder will only be confirmed by “Lot” if multiple subscribers make the same bid offer for the same Discount Amount.
Claim of Prize money
The successful bidder will get a proposal form at the conclusion of the auction, which will specify the kind of assurance and security that must be provided in order for him or her to be eligible to claim the winnings. The auctioneer will clarify right away the kind of surety and security that the bidder is expected to provide. In order for it to be approved, the bidder must submit the proposal form within seven days of the auction date. The foreman will sign the documents and, if necessary, complete other formalities if the surety and security details provided in the proposal form satisfy him or her.
The prize money will be disbursed on the thirtyth day following the auction, once all regulations have been fulfilled.
Terminology used in Chit Business
Chit Value – The Gross amount of monthly subscriptions payable by the Individual Subscriber during the Chit Period
Group & Ticket No. – Pooling of Subscribers under an identified Reference Number with individual Serial Numbers allotted to each one of them
Subscription – The amount payable by a Subscriber every month after completion of the Auction. It may vary from month to month depending upon the amount discounted by the Bidder in the auction.
Tenure – It is nothing but the duration of the Group i.e.,Number of Months
Installment – Series of monthly subscription amount payable by the Subscriber every month
Auction – The method of proceeding to decide the Successful Subscriber among the participated Bidders
Re-auction – If the Prized bidder is not able to provide the sufficient surety or security and failed to claim his/her prize money amount within 60 days from the date of Auction, the said auction will be cancelled by the Foreman, as per the agreement, and conduct another auction called “Re-auction” to confirm the new bidder.
Discount – In a particular Auction proceeding, the amount forgone by the Bidder from his Chit Value
Prize Money Amount – The Gross Value of Amount receivable by the Prized Bidder after deducting the amount foregone from the Chit Value
Foreman – The Person, who conducts the Chits, as the Chit Agreement, is called “Foreman”.
Foreman Commission – Foreman is entitled for 5% on Chit Value towards Charges for organizing and conducting Chits every month.
Dividend – The amount, which is distributed equally among the Subscribers’ in the Group, after deducting the Foreman Commission from the amount discounted by the prized bidder in the auction, is called “Dividend”.
Interest – The Subscribers have to pay their monthly subscription amount on or before the due date every month to facilitate the release of the prize money amount to the bidder on date. Failing which, charges for the delayed payment, Interest, will be collected, as per agreement, from them.