Registered Chit Funds Are Safe – Here is Why

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Are Chit funds safe?

Are Chit funds safe? This is the first question that comes into the mind of many common man, the moment he starts considering the option of an investment in a chit fund program. There is a saying that Trust is like a piece of paper, and once the paper is crumpled it cannot be made perfect again. Hence, having firm trust and belief in the reliability of the chit fund company where one wants to invest one’s hard earned money is most important.

Some scams led to disbelief in Chit funds


An occasional scandal about fraudulent activities has been the cause due to which many people lost their faith in chit fund companies, and ended up developing mistrust. Even till today, people lack proper knowledge and awareness about chit funds. When something goes wrong with an investment, people wrongly categorize it as fraudulent chit fund activity. A company was said to have involved itself in a chit fund scam a few years back, but it was later discovered that the company was not a chit fund company after all. A ‘Ponzi Scheme’ (fraud scheme) was being run by the company along with a set of collective investment schemes (CIS), which were incorrectly or falsely referred to as chit fund schemes.

The company had variations of collective investment schemes (CIS) and to generate money and tempt people to put their money, they informed investors that they would get high returns after a fixed period. The investors, allured by these schemes and naturally hungry for making a quick buck, did not know the true nature of their investment. Thus some investments were sold fraudulently and falsely in the form of chit funds. But this was actually not an investment in chit funds because the company was not a registered chit fund company, governed under the Chit Fund Act 1982.

What is Chit Fund Act 1982 ?

Chit Fund Act 1982

The Chit Fund Act 1982 runs to many pages. However, some rules set under this Act are :

  • A chit fund company, registered under the Chit Fund Act 1982 can manage conduct or superv
    ise as foremen, agents or in other capacity, Chits (as defined in section 2 of the act).
  • Such schemes can be conducted and run by organized financial institutions. In other words, Chit Fund Act 1982 has been made to provide for the regulation of Chit funds and for matters connected therein
  • The Act also strictly says that no chit shall be commenced or conducted without obtaining an official sanction from the State Government of that jurisdiction.
  • Filing of a chit agreement (in duplicate) is a must, by the company.
  • There is also a regulation to create a minimum capital for the commencement of the chit company and a ‘reserve fund’ to be kept aside for the same.
  • The company should also deposit in an approved bank an amount equal to the chit amount in the name of the Registrar.
  • The companies registered under chit funds act 1982 have to prepare profit and loss statements and file their balance sheets every year.
  • The company cannot misuse the funds collected from chit subscribers other than for the business meant and
    for remuneration, commissions and lending advances- all related to the scheme and the company.
  • Further, the company is committed to pay the prize money to the subscriber, as per the rules of the company.

To summarize it all, chit fund companies which have been registered under the chit fund act 1982 are governed and controlled by the state government, so there is not even a remote chance that people who have put their hard earned money in chits in a Registered Chit fund company will lose their money or get duped.

Why one can make a safe investment with Shantala Chits ?



Shanthala Chits Pvt Ltd is a registered chit fund company since 1996, governed by the Registrar of Chits and the company abides by the Chit fund Act of 1982. Having an excellent track record, Shanthala Chits has, since many years, made the dreams of many a common man come true. Their consistent above the mark performance and trustworthiness have earned a high reputation in the market. Their clients have spread the word to the world as to how reliable and prompt they are in their service as well as payments.

Padma lochani
Padma lochani

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