How does a Chit Fund Operate?
Chit Funds
A powerful financial tool with a rich history and unique advantages combines saving, borrowing, and community spirit all in one. Whether you're building your dream home, planning a wedding, or simply want a secure savings plan, Chit Funds can be your key to financial success.
How does it work?
Chit Funds are a rotating savings and credit association where members contribute regularly to a common pool, and each month, one lucky member receives the entire amount for their needs.
Join the Circle
Choose a chit fund with a fixed duration (e.g., 1 year) and monthly contribution amount. The number of members determines the total lump sum each month.
Bid for Your Big Break
Every month, a reverse auction takes place. Members compete by lowering their bids for the chance to win the full amount.
The Winner Takes the fund
The member with the lowest acceptable bid wins the pot! They pay a small discount, which gets shared among the other members as a bonus.
Reverse Auction
In chit funds, a reverse auction determines who gets the lump sum each month. Instead of bidding upwards, members bid downwards, lowering their own bids to win.
This unique system allows for:
Chit Funds
Research thoroughly:
Choose a registered fund:
Start small:
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