In India, chit fund has been an on-growing industry that comes under a valuable saving scheme. According to the Chit Funds Act of 1982, the chit fund companies have been managed, conducted, and regulated. Though the chit fund companies in India comes under central legislation governance, state government is responsible for their administration. In particular, Tamil Nadu funds were guided by Tamil Nadu Chit funds Act of 1961, Maharashtra Chit Funds Act of 1975 in Maharashtra and in Kerala, Kerala Chitties Act 1975.
In India, there are three different types of chits available. Here are the three types,
- Funds run by State governments
- Private registered chit funds
- Unregistered chit funds
State government governed chit funds
Chit funds that are managed and regulated by state governments comes under this category. In addition, PSUs also comes into this category. As these are safe, the chances of loss are limited. Business process is also transparent and clean. Mysore Sales International Limited (MSIL) and Kerala State Financial Enterprises (KSFE) are the government managed chit examples.
Private registered chit funds
Private registered chit funds have begun in the year 1980s and are registered under Chit Fund Act of 1982. These sort of chit funds have been normally floated by financial institutes. Compared to the state government chit funds, participating in private registered chit funds is the chit investor’s own risk.
Contributing to chit funds comes under market risks and conditions. Hence, there are many co-operative societies that conduct chit funds. We cannot blame all private chit funds. Nowadays, private chit funds are also performing well when compared to government chit funds. For example, Shriram chits of Shriram Group is a well known private chit fund sector.
Unregistered chit funds
Unregistered chit funds are the type of chit funds that are not legal and are participated under the person’s own risk. Formation and management of these chit funds are fully based upon the trust of the person. Participation in such chit funds may include forming groups within their friends or relatives.
Surprisingly, the number of unregistered chit funds are at high. As registered chit funds have some sort of rules to follow, here in unregistered chit funds there are no particular rules. There are specific factors including the foreman’s commission, members’ behavior, etc.
These are the different types of chit funds prevalently used in India. Whatever the chit funds may be, managing quite lots of chit funds is troublesome. For that, you can avail the best chit fund software, Mazechit.
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