Chit funds is a way of circulating money between its members. The chit funds will come under NBFC (Non Banking Financial Services) and are regulated by Chit Fund Act,1982.
Chit means a transaction 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 as may be specified in the chit agreement, be entitled to the prize amount.
You can view the Chit Fund Act,1982 here:The Chit Funds Act,1982
The example of chit fund, amounts payable as each installment,Applicable framework for preparation of Financial Statements of Chit Fund Company as per Chit Fund Act,1982.
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