Chit Fund Company
A chit fund is a very popular type of savings scheme in India – in fact, it is one of the main parts of the unorganized money market industry. The chit fund company, which runs a chit fund, provides access to savings and borrowings for people with limited access to banking facilities. These chit funds are run by chit fund companies.
A Chit fund is a kind of savings scheme practiced in India. A Chit fund company means a company managing, conducting or supervising, as foremen, agent or in any other capacity, chits According to Section 2(b) of the Chit Fund Act, 1982, 'Chit means a transaction whether called chit, chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specified of persons that every one of them shall subscribe a certain sum of money by way of periodical installments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount'.
Such chit fund schemes may be conducted by organized financial institutions or may be unorganized schemes conducted between friends or relatives.
Registration of a chit fund company
While these companies are often thought to be illegal, this is rather untrue. This industry is completely regulated by the government, though these companies aren’t registered with the Reserve Bank of India.
However, no individual in India can start a chit fund business until she/he is registered with the chit registrar. Every district or city has a chit registrar, where one needs to go and apply for the chit fund registration. Nevertheless, before one goes there, one must register a private limited company in India under the Companies Act 2013 and then register apply for the license with chit registrar.
Documents for Starting a Chit Fund Company
Personal documents of the director
PAN Card details
ID proof (Voter ID card, passport, Aadhar card, driving license)
Address proof (Latest bank statement, electricity bill, mobile bill, telephone bill)
Passport size photograph
Registered office documents
Latest electricity bill
Rental agreement (in case the premises is rented) and an NOC from the landlord
Sale deed (in case the property is owned)