How Does Chit Works

The following illustration will explain how a chit works

What is chit?

The Chit is a financial arrangement where certain number of people/customers enter into an mutual agreement that subscribes to a certain sum of money by way of installments over a predefined period of time. Each Customer shall in his own turn around the chit period.

Why chit

It is a way to get money at 0% interest rate. If you need money, the bank will charge interest on the loan. However, chit funds help you raise money without any interest.


The Foreman or Chit Fund Company has to gather 50 people who are interested in investing in this chit group. These 50 persons are called Subscribers.

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