Kapil Chits is a professionally managed company in the service of its subscribers for over 31 years. It has been in this business since 1981. It is backed by a well diversified group, the Kapil Group which has interests in Real Estate, Media, Information Technology, Construction, Agriculture, Horticulture, Diary, Bread Manufacturing, Ayurvedic Hospital, Tours and Travel etc. The group is socially responsible. It supports a non -profit cancer hospital and provides scholarships to poor meritorious students.

In addition Kapil Chits in the interest of its subscribers offers a discount of 0.5% of the installment, if the installments are paid at the Kapil Branch Office before the 10th of every month. There is also a provision for payment at any Kapil Chit Fund Branch or collection of the monthly installments from your doorstep. There are also plans for online payment.

By joining a chit fund, a person is forced to save a small part of his income, to meet his planned/unplanned investments or expenditure. In case of contingency, borrowing from the chit fund is much easier, simpler, faster and cheaper. In case a person wants to save till the last, the return a subscriber gets by way of chit dividends is much higher.

A subscriber who has lifted his chit or to whom the chit amount is paid is called a prized subscriber.

A subscriber who has not lifted his chit or to whom the chit amount has not been paid yet is called a non-prized subscriber.

• Persons who want to save money and receive the prized/bid amount in the second half of the chit period, earn very much higher return (12-18% per year) than their periodic savings kept with a bank.

• Those in need of money are able to raise money by receiving the prized/bid amount when they are in need of money. The interest or chit loss in such cases is very much less than the market rates.

• All persons joining a chit group are forced to save a small amount of their income to finance their dream projects such as – purchasing a plot or building a house or meeting marriage expenses or buying domestic articles, or discharging an existing liability etc.

• Each person who pays his periodic installments up to date is entitled to receive the prized amount at a period of his choice, after participating in a lottery/auction.

Since the successful bidder, in the initial few months is allowed to use the chit amount, for his personal use ahead of others, he offers to take the chit amount at a discount, after calculation interest and cost of funds. It may be noted that a successful bidder withdraws more money from the company, than he had already paid, and repays the excess amount withdrawn, in periodic installments until completion of the chit period. The excess amount so paid is known as chit loss.

The difference between chit value and the amount at which a successful bidder takes a chit in a lottery auction is known as auction discount.

Auction is a procedure for identification of the non-prized subscriber who wants to take a chit amount at the highest permissible discount. All non-prized subscribers who have paid their installments up to date are allowed to participate in the auction for bidding up to the highest auction discount, within a period of five minutes allowed for each auction.

Auction discount minus company commission (5% of chit value) is the total group dividend. Total group dividend is distributed equally amongst all the subscribers. This dividend so distributed is deducted from the next installment payable by the subscriber.

When more than one non-prized subscriber wants to take the chit amount at the same discount, the chit numbers (coins) of all such non-prized subscribers are put in a container and the successful bidder is identified by removing one number (token coin) from the said container. The procedure is known as lot or lottery.

When there is no member in the chit group who is willing to receive the prized/bid amount at the maximum allowable discount, the bidding for the chit comes in for open auction. This is known as coming to open.

Normally for all chits a minimum of three sureties or guarantors other than family members are insisted upon. The basic salary or taxable income of all such sureties or guarantors should not be less than 20% of the chits’ future liability.

The chit fund company conducting the chit business also known as Foreman charges 5% of the chit value as commission or service charge for the services rendered by it. The foreman has to gather a group of persons to form a chit group, collecting money from each subscriber every month, arranging payment of prized money to one person each month and collecting money from prized subscribers etc is work for the foreman.

All activities of the company are regulated/monitored by the government department under the chit fund Act 1982.

A chit fund company undertakes to collect periodic installments from all the subscribers and pay the amount so collected, after deduction its commission (5% or the chit value) to one of the non-prized subscriber each month. At every point in time, the chit fund company pays the prized subscriber more money, than what it had collected from the prized subscriber, on the understanding that the prized subscriber will pay the balance future installment on time. In other words, the prized subscriber takes a loan advance from the chit fund company, with an understanding to repay the balance future installment in time, to enable the foreman to pay the prized money to other non-prized subscribers each month. In order to safe guard the interest of all non-prized subscribers each month the chit fund company insists upon the prized subscriber to provide guarantee for repayment of future installments.

Penalty is collected from all subscribers who make delayed payment of periodic installments. In case a non-prized subscriber defaults for a continuous period of three months, such subscriber will be removed. The actual amount paid by him in the chit minus company commission will be repaid to such defaulting subscriber, after completion of the cit period. In case a prized subscriber defaults for a continuous period of three months, a penalty of 6% per month will be collected and dividends will also not be paid to such defaulting prized subscriber. Legal action will be initiated against the said defaulting prized subscriber and his guarantors in court of law, for recovery of all dues.

When a subscriber withdraws, the foreman has to find an alternate subscriber in his place. Until then the chit fund company has to arrange funds on behalf of such a defaulting subscriber, for payment to a prized subscriber each month. Hence withdrawal is permitted, but the actual amount paid by the subscriber in the chit minus company commission will be repaid to such a defaulting subscriber at the end of the chit period.

Payment can be expected after completion of documentation.

The chit loss can be deducted from the income from profession or business. The net surplus or dividends after completion of the chit period need to be offered as income, but some courts have ruled that this income is not subject to income tax.

Cash, cheques, demand draft, pay order and bank transfer are accepted modes of payment.

A subscriber can participate in not more than three chits in the same chit group.

The chit groups vary from one lakhs to thirty lakhs.

The duration of chits are normally 25 months, 40 months and 50 months.

Yes you can make payments at any Kapil Chit fund branch.

All the dividends receivable till date of joining the group are earned by the member joining a vacant chit.

Registered chit funds are regulated by the government departments, Unregistered chit funds are prohibited by the government and the subscriber will be at the mercy of the promoter without support from government agencies.