What Is A Chit Fund & How Do Chit Funds Work?

Chit funds are also known as chitty, kuree, etc. When one joins the best chit fund in India, they consent to make a certain number of contributions of a specified amount to the fund. Then, at the appropriate time, they claim the necessary sum of money either personally, by lot, or via an auction. They must make recurring payments over time to reimburse the money they earn.

How does chit fund work 

To understand how a chit fund works, let’s take an example : 

If there are fifteen people involved and the chit fund within India is for 15 months, each subscriber must give Rs. 1000, for a total of Rs. 15,000 per month.

If they need money in the first month, they can place a bid on it. The person who won the bid will receive Rs 12,000 if the offer is accepted, Rs 12,000, while the rest will pay less because the amount of the chit fund in India has gone for less.

The individual who makes the last choice would receive over Rs 15,000, but he has advantages because he hasn’t made a $1,000 contribution in fifteen months, so he contributes less and gains more.

Chit Funds Vs Mutual Funds

Chit fund and mutual fund both dominate their ways and allow investors or participating members to earn huge profits on their investment, but the catch is that mutual funds are being managed by a governmental body, whereas chit funds are not managed generally by any official institution which increases the number of frauds in the chit fund industry. 

Top 10 best chit fund in India

Here is the list of top 10 best chit fund in India, which you can take into consideration if you are interested in chit-fund investing. 

Name of Chit FundAuthority
Government of Kerala Linked ChittyThe Government of Kerala
Margadarsi Chit FundsRamoji Rao 
Shriram ChitsShriram Ownership Trust and Sanlam Group
Mysore Sales InternationalGovernment of Karnataka
Kapil Chit fundsKapil Group
Amruthadhara Chits and Finance Private LimitedAmruthadhara Chits and Finance Private Limited
Gokulam ChitsA.M. Gopalan
Guru Nanak Chit FundGuru Property and Construction Pvt. Ltd.
Purasawalkam Santhatha Sanga Nidhi LimitedGindalapuri Sundaresan Venkataraman 
Louis Chit Funds Private LimitedErnskulsm


Chit fund investments are a typical type of investment in rural communities. However, before making an investment in a chit fund, do lots of research. Illegal chit companies have occasionally been charged with taking hundreds of thousands of cash from participants. Consider all of these risks before making an investment in the top chit funds in India. The best chit fund in India taken into account are managed by appropriate institutions. 

Frequently Asked Questions 

  1. Is chit-fund a viable choice?

Yes, investing in and saving money through chit funds is a good choice in India. However, some con artists have damaged the chit fund’s reputation. Government-run chit funds are preferred by many investors because they pay out greater dividends.

  1. In India, are chit funds permitted?

Yes, as long as the company is registered, chit funds are acceptable in India.

  1. A licensed chit fund is what?

The Registrar of Firms, Societies, and Chits can register chit funds. In accordance with the Chit Fund Act of 1982, RBI controls chit funds.