About Chit Fund Company

Chit fund is a kind of savings scheme practiced in India. A chit fund company is a company that manages, conducts, or supervises such a chit fund, as defined in Section of the Chit Funds Act, 1982.

 

Chit fund business in India is regulated under the Chit Fund Act, 1982. As per the Act, a “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 number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical instalments 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. A transaction is not a chit if some alone, but not all, of the subscribers get the prize amount without any liability to pay future subscriptions or all the subscribers get the chit amount by turns with a liability to pay future subscriptions.

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Register my Chit Fund Company

Our Professional Fees : INR 41,300/-

(Prices are inclusive of GST; Government Fees and other charges will be charged at actuals)

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Our scope of work

    1. Any amount of Capital;

    2. Application for 2 Director Identification Numbers;

    3. Application of 2 Digital Signatures (validity 2 years);

    4. Name Approval;

    5. Drafting of Memorandum and Articles of Association;

    6. Drafting of other additional documents;

    7. Preparation of various eforms;

    8. PAN & TAN Application

    9. Resubmission of eforms, if any;

    10. Obtaining Certificate of Incorporation from Registrar;

    11. Application to Chit Fund Registrar in the respective states;

    12. Obtaining Chit Fund License

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Know more about Chit Fund Company

Chit fund is a kind of savings scheme practiced in India. A chit fund company is a company that manages, conducts, or supervises such a chit fund, as defined in Section of the Chit Funds Act, 1982.

Chit fund business in India is regulated under the Chit Fund Act, 1982. As per the Act, a “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 number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical instalments 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. A transaction is not a chit if some alone, but not all, of the subscribers get the prize amount without any liability to pay future subscriptions or all the subscribers get the chit amount by turns with a liability to pay future subscriptions.

 

IT IS RECOMMENDED THAT THE PROMOTERS OF THE CHIT FUND COMPANY FIRST START A PRIVATE LIMITED COMPANY WITH THE OBJECTIVE OF OPERATING A CHIT FUND BUSINESS.

 

1. Director:

  • Minimum no. of directors required are 2 out of which 1 shall be Indian Resident.
  • Directors are the managers and they are responsible for day to day functioning of the company.
  • Director Identification No. (DIN) and Digital Signature Certificate (DSC) are required to be a director of the company
  • Any person can be a director of the company including family members

2. Shareholder:

  • Minimum no of shareholders required are 2.
  • Director and Shareholders can be the same.
  • Shareholders are the owners of the company

3. Capital:

  • There are 2 types of capital i.e. Authorize Capital (It is the capital up to which company is authorize to raise from the member and it can be increase as and when required.), Paid Up Capital (It is the capital which is paid up by the members of the company and it can be increase as and when required.)
  • There is no such requirement for minimum capital, hence the company can be formed with the capital starting from INR 1.

4. Registered Office:

  • Any place can be made as the registered office of the company even the residential place can be used as the registered office of the company.

Note: A chit fund business can only be commenced after obtaining chit fund business registration from the relevant State Registrar.

Obtain DSC (Digital Signature Certificate)

01

Prepare SPICe+ form (Part A – Name availability and reservation request)

02

Prepare SPICe+ Part B form (Company information i.e. directors, capital etc.)

03

Prepare e-form SPICe+ MOA (INC-33) ,SPICe+ AOA (INC-34) and SPICe+ AGILE-PRO (INC-35)

04

Download all the e-forms prepare online and affix DSC on all the e-forms.

05

Attached the require documents with form SPICe+ and upload the e-forms to MCA portal.

06

Verification and Issue of Certificate of Incorporation by RoC

07

Apply with the relevant Chit Fund Registrar of the State to obtain registration

08

Advantages

The rate of borrowing is much cheaper than other non- banking loans like money lender.
A Chit Fund Company is suitable for unorganized economy group and needy people who are unsure of their cash flows and for their unexpected expenditure.
You can get finance from Chit Fund Company easily without documents like PAN card, IT returns, bank statements, etc.

Disadvantages

There are no security in unregistered chit fund companies. There are more chances of getting duped by these fraud companies.
No guarantee for fixed returns, as these returns are based on auctions.
In chits, interest earnings are lower than bank FDs.
Chits cannot make money; it is just a mechanism for liquidity and emergency funds.
Factors of Comparison Private Company Public One Person Company Limited Liability Partnership Partnership Sole Proprietorship
Capital Min: INR 1 & Max:No Limit Min: INR 1 & Max:No Limit Min: INR 1 & Max:2 Crore Min: INR 1 & Max:No Limit Min: INR 1 & Max:No Limit Min: INR 1 & Max:No Limit
Director Minimum 2 Minimum 3 Minimum 1 - - -
Shareholder Minimum 2 Minimum 7 Minimum 1 - - -
Designated Partner/Parter - - - Minimum 2 Minimum 2 -
Taxation 30%(25% if turnover does not exceed 250 Crore) 30%(25% if turnover does not exceed 250 Crore) 30% 30% 30% As per Slab Rates
Statutory Audit Compulsory Compulsory Compulsory If Contribution exceed INR 25 Lacs; If Turnover exceed INR 40 Lacs Not Required Not Required
Investor Preference High Low Low Medium Very Low Very Low
Compliance Cost Mdeium High Low Low Low Low
Regulator Registrar of Companies SEBI/Registrar of Companies Registrar of Companies Registrar of Companies Registrar of Firms -
Time take for Registration 5-7 working days 5-7 working days 5-7 working days 20-25 working days 10-12 working days 5-7 working days