Chit funds are governed by the central Act, i.e., The Chit Funds Act, 1982, and respective state rules. In chits, subscribers enroll by executing an agreement called the Chit Agreement, which contains all the basic terms and conditions governing the management of the chit.
A Chit Agreement will be in line with Section 6 of the Chit Funds Act, 1982, and will cover the basic terms and conditions applicable to both the Foreman (company) and the subscriber. Please note that, as we operate in different states, some of the terms may vary from state to state.The following are the general contents of our Chit Agreement and our terms and conditions.
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Apart from terms and conditions, a chit agreement will generally cover the following basic information
| Full Name and Address of the Subscriber | No. of Tickets / Installments | Amount per Ticket per Installment | Series and Chit No. | Chit Amount |
|---|---|---|---|---|
The foreman’s commission shall be 5% of the chit amount at every installment of the auction. All subscribers must pay the full amount of the last installment. The foreman will subscribe to a ticket in the chit and will obtain the chit amount during the 1st installment without any deduction of the discount.For the 2nd installment, all subscribers of chits registered must pay the amount in full. from the 1st installment onwards, payments should be made after deducting the dividend declared for each month. Subsequently, all installments for subscribers should be paid after deducting the monthly declared dividend
The subscriber who is to receive the prize amount at any installment shall be determined by lot or by auction at the time and place specified in the chit agreement. The actual time allowed for the auction shall be five minutes after the commencement of the Chit Auction Proceedings. Those who have subscribed to a full ticket shall be treated as subscribers, and fractions of tickets will not be considered. The proceedings will be regulated and conducted by the Foreman or his authorized officer, and in all cases of dispute, the decision of the Foreman/authorized officer will be final.
The auction shall start from the Foreman’s commission of 5% of the chit value, and bidders may, in auction, raise the discount to a maximum of 30/35/40 percent of the chit value specified for each group. Each time, the bid shall be raised by rupees one hundred or multiples thereof. Oral/Written bid offers which are not in hundreds or multiples thereof are liable to be rejected. Any non-prized subscriber who bids at the highest discount, not exceeding the above- specified maximum, will be declared as the prized subscriber in each auction. In case there is more than one bidder for the same amount of discount, the prized subscriber will be decided by lot among such bidders. Only the subscribers who have paid their monthly installments up to date, or their authorized persons/proxies, will be allowed to take part in the auction. Such authorization shall be in writing. Proxies shall furnish the proxy form as required under the law
A non-prized subscriber, who has paid his monthly installment up-to-date and cannot personally participate in the auction, may send his authorized agent or forward to the Foreman a bid offer stating the maximum amount of discount he is willing to offer, which must be received by the Foreman at least one day before the concerned auction date. Defaulted subscribers will not be allowed to participate in the auction. No outsider shall be permitted to participate in the auction except authorized persons and proxies. Chits which have been given as security for other prized chits will not be allowed to be auctioned without written consent from the Foreman. A subscriber, who has drawn a chit at any of the offices of the Foreman and subsequently becomes a defaulter, is not entitled to bid and draw further chits, if any, he happens to hold, in any other branch.
Any non-prized subscriber who has paid his monthly installment up-to-date and wishes to take part in the auction is entitled to do so within the five-minute time limit fixed for the chit auction. The auction shall not be confirmed and concluded before the close of this time limit and If no bidder is forthcoming in such an auction, a lot will be drawn from the non-prized subscribers at the close of five minutes, and the subscriber drawn by lot will be declared the prized subscriber. He is entitled to receive the prize amount less the fixed minimum discount equal to the Foreman’s Commission as specified. The dividend for every auction shall be equally distributed by way of deduction in the next installment to the subscribers, out of the discount less the Foreman’s commission of 5% of the chit value.
Each and every subscriber shall pay to the Foreman the amount due for his ticket for each installment on or before the due date of each such auction and shall get a receipt from the office. Payments made by cheque should reach at least 7 days before the due date of payment. Only after the realization of the cheques will the subscriber be eligible to participate in the auction. All cheques and drafts should be duly crossed. If the realization of the cheque is unduly delayed for any reason whatsoever, the subscriber should pay online or the cash against such cheque whenever the Foreman insists. If any cheque delivered by the subscriber is returned unpaid, service charges and other bank charges shall be borne by the subscriber, and in the future, only D.D./cash shall be accepted from such subscribers.
Subscribers are advised to collect valid receipts after depositing cash/delivering D.D./cheque and thereafter get it entered in the respective passbook. Entries in the passbook are not valid without permanent receipts. They are advised not to write anything of their own in the passbook
Due intimation will be informed through SMS. Non-receipt of the intimation by the subscriber should not be a valid reason for not paying the subscription. Every subscriber must pay the installment on or before the due date. The subscriber can also pay the installment through net payment or money transfer like online,NEFT, RTGS, etc.
The prize amount will be paid to the prized subscriber at the Foreman’s office during office hours on working days through a crossed A/c. payee cheque. If desired, it can be paid through crossed D.D./Direct Transfer, and the charges should be borne by the subscriber. This will be done within one month of his/her furnishing sufficient security for the due payment of future installments to the satisfaction of the Foreman. Prized subscribers, before drawing the chit amount, must furnish necessary security or sureties to the satisfaction of the Foreman for due payment of the future installments. The security may be any of the following:
The discount for every ticket auctioned shall be disbursed as dividends equally between the prized and non-prized subscribers after deducting the Foreman’s commission. Such dividends shall be adjusted towards the subscription payable for the next installment.
If a non-prized subscriber wishes to transfer his/her rights in the chit, he/she shall file an application to that effect with the Foreman, specifying the name and address of the person in whose favour he/she wishes to transfer his/her rights. The Foreman has the right to approve or not approve such a transfer. If he does not approve the transfer, the decision shall be communicated to the said non-prized subscriber. If the transfer is approved, the transferee shall be entitled to no more rights than the transferor had in respect of the said ticket transferred. Once a chit is transferred, he/she will not have the option to transfer it again.
Without the prior written sanction from the Registrar of Chits, the Foreman shall not transfer his right to receive the subscriptions from the prized subscribers. Any such transfer shall, if it defeats or delays a non-prized subscriber, be avoidable at the instance of the subscriber
The chit monies shall be deposited in any bank approved under the provisions of the Chit Funds Act, 1982
Any amount due to the Foreman from any subscriber on account of his/her chit or chits guaranteed by him/her shall be appropriated from the subscriptions paid by such subscriber in any of his/her other chits with the Foreman. Similarly, the security and other deposits of money made by the Foreman in respect of the chit shall be liable for discharging the liability of the Foreman to the subscribers.
Incidental charges pertaining to intimation sent to the defaulted subscribers and to their guarantors, SMS charges, enrollment fees, chit transfer fees, vacant chit interest, and duplicate passbook charges fixed by the Foreman, as well as all taxes levied by the government, should be borne by the concerned subscriber only
Receipts shall be issued by the Foreman for all payments received by him. The subscribers shall provide proper acknowledgments for other documents and vouchers for all monies received by them from the Foreman.
The chit amount shall in no case be enhanced or reduced.
If the Foreman fails to conduct and continue the chit, he shall pay the non-prized subscribers their contributions, including dividends, within one month, failing which the said subscribers shall be entitled to realize the same with permissible interest from the Foreman or from all or any of the following assets: (a) The security deposit given by the Foreman. (b) Other properties belonging to the Foreman. (c) The future subscriptions due to the Foreman from the prized subscriber.
Other than the one chit amount which the Foreman is entitled to take in the first installment without any discount, if he holds any other tickets and becomes prized, he shall provide sufficient security for the payment of future subscriptions in respect of these additional tickets, to the satisfaction of the Registrar. The Foreman shall not have any more rights than the other subscribers have in respect of such additional tickets..
As the Foreman is an incorporated company, the question of the Foreman dying or becoming unable to conduct the chit does not arise unless it goes into liquidation. If it goes into liquidation, the official liquidator under the Indian Companies Act will act as Foreman.
Even if the dates fixed for auctions fall on holidays, the auctions will be conducted on those days only. If the auction cannot be conducted on the appointed day owing to causes beyond the control of the Foreman, such as festivals, national holidays, freaks of nature, bundhs, riots, etc., the auction will be adjourned to another convenient date, which will be intimated through SMS to the non-prized subscribers
If any dispute arises between the Foreman and the subscribers, and in the absence of any provisions in this Chit Agreement, the provisions of the Chit Funds Act 40 of 1982 and the rules framed thereunder shall apply and be binding on both the Foreman and the subscribers.
The Foreman, on receipt of a fee of Rs. 5/-, will allow examination of pertinent chit records by non-prized and unpaid prized subscribers under Section 44 of the Chit Funds Act, 1982, at the Foreman’s office during office hours on all working days. One week's prior notice should be given to the Foreman. The inspection fee shall be levied separately for each chit for which inspection is desired
If the subscriber or the guarantor dies, becomes of unsound mind, or is otherwise incapacitated, the amount due to the Foreman will be recovered from the legal heirs of the deceased subscriber or guarantor, as the case may be.
In respect of other points that have not been covered in this agreement, they should be dealt with in accordance with the provisions of the Chit Funds Act, 1982
General laws shall apply to points not covered either by this Chit Agreement or by the Chit Funds Act, 1982. Any dispute which are not covered under the Chit Funds Act, 1982, arising herefrom shall be resolved through arbitration by a sole arbitrator appointed by the Foreman under the provisions of the Arbitration and Conciliation Act, 1996. The seat of such arbitration shall be at Thiruvananthapuram, Kerala, and the language shall be English. Subject to the arbitration clause, the civil court at Thiruvananthapuram shall have jurisdiction to try and entertain any dispute arising herefrom.
The subscriber shall be responsible for the transaction by responding to the OTP sent by the Foreman to either their registered mobile or email ID. This verification will also constitute a valid acceptance by the subscriber of the terms and conditions contained in the Chit Agreement, and the same shall have a binding effect on the subscribe