CHAPTER-1

INTRODUCTION
Introduction
The chit subsidize is an indigenous plan doing money related administration to general society
since the year 1120 with offering framework (limiting of the chit sum). Once, it was designated
"draw chit" (by part). This technique did not at the appropriate time pull in the supporters since
it couldn't fill the specific need of the chit in perspective of 'By Part' which helped serve the
unnecessary endorsers as it were.

In this way, the advertisers and the endorsers met up set out to give a proposition to put the chit
sum before the supporters present to sell and who offers/prizes the chit limiting with no roof
of rebate for their earnest needs, proclaimed as prized endorsers.

Unloading the chit was an alluring term with mass valuation for the general population till now.

In the beginning of 1970-80, some chit assets, by sporadic disappointments due to non-
accumulation of unfulfilled obligations from the defaulters of the chit gathering, fell by some
different reasons.

However, the legislature comprehended that the higher rebate in chits was the disappointment
of the chit reserves and sanctioned a law which gives the provision of roof of 30% in markdown
in the year 1982.

Giving the roof of rebate might be at standard to the Lottery Chits, however no sale or
conduction chit which is in opposition to genuine sense and soul of the words Sale
Chits/Customary Chits/Business Chits. Prizing the chit with higher markdown is an open
technique being received so far to meet the earnest needs of a poor supporters and the prize
sum is assumed as spent towards their prerequisites which isn't a misfortune yet it might be
treated as costs towards recovery of vowed property, and to fix the house or to finish the
deficient house, perform marriage to children and little girls, higher examinations and for
looking for employments to their dependants with the prize sum which is an advantage and not
a misfortune.
How does chit funds work?

The accompanying outline will clarify how a chit function. There is another chit gather that is
initiating. The estimation of the chit is 500,000. This sum is known as the Chit Esteem.

With the end goal of this outline, we will think about the span of the chit to be 50 months. This
is known as term period for the chit gathering. The Foreman or Chit Reserve Organization
needs to assemble 50 individuals who are keen on putting resources into this chit gathering.
These 50 people are called Supporters.

When the chit bunch begins, the foreman needs to enroll the chit with the enlistment center of
chits. He needs to pay 100% of the chit esteem as security. This sum can be pulled back simply
after the said chit amass closes and each supporter is paid what is because of that person. This
control ensures the interests of the supporter of a specific degree. The sum to be spared each
month by the Endorser is Chit esteem/No of individual's i.e. 500,000/50 = 10,000. This is
otherwise called Month to month Membership. It might be noted here that the quantity of
people putting resources into a chit and the term of the chit is dependably the equivalent. The
most extreme month to month commitment or Membership Sum that an Endorser will pay is
10,000. The Endorser does not generally pay the whole Membership sum each month. Give us
a chance to discover how and why he doesn't need to pay the whole sum. The most extreme
markdown or greatest offer allowed ranges from 30-40%. With the end goal of this outline we
will accept that an Endorser has offered 35% of the chit esteem. 35% of 500,000 is 175,000.
This sum is known as Chit Markdown. The foreman charges 5% of chit esteem as commission.
In this representation, that would add up to 25,000. This is deducted from Chit Markdown i.e.
175,000-25000=150,000. This sum is accessible for equivalent appropriation among the
endorsers. In our model, 150,000 would be partitioned similarly among 50 supporters. Every
endorser would get a markdown of 150,000/50 = 3000. This sum is known as Profit. In the next
month, all supporters would need to just pay 7,000 rather than 10,000. This is on the grounds
that they have earned a chit rebate of 3000.

Contingent on the opposition inside the chit aggregate the rebate percent would fluctuate. The
minimum rebate would be 5% which is the foreman's bonus. The offering procedure will
proceed until the finish of the chit time frame. As such, the endorsers can obtain more than
what they paid in the main half time of the chit term and spare their cash in the event that they
choose hold up further into the chit time frame.
Why invest in chit funds:
Chit as a loan:

Little and Medium Endeavours (SME's) Money streams are the life saver of business - small
or big. Normally big organizations figure out how to meet their capital prerequisites with the
assistance of banks and other formal money related channels. Banks stretch out convenient
help to huge endeavours and it is a success win circumstance for the two gatherings.
Independent ventures are customarily kept away from by banks and formal financial
establishments in view of their bookkeeping methods, absence of appropriate recordkeeping
and can't give acceptable security. They have been truly wedged between the cash
moneylenders, with their excessive expense of credits, and banks, with their stringent
techniques. Chit reserves are a progressively reasonable financing model for private ventures
for the most part since they don't require thorough documentation. Chit reserves have been
helping independent ventures defeated their financial requirements. As and when the need
emerges, SME's offered in the closeout and get the advance out of their own assets. When they
get the advance, they keep on paying the month to month commitments, and this records for
instalment towards both the intrigue and main which makes the reimbursement simpler and
less difficult. Likewise, in chit reserves, little dealers can choose their very own financing costs
relying upon their need. Chit support loan costs are as a result the market decided financing
costs. In this manner, a little endeavour, with judicious arranging can meet their capital
prerequisites with the assistance of a Chit Store.

Chit for Saving & investment

Never let your cash sit inert, make it work more diligently than you do. Contributing is a long-
lasting procedure. The sooner you begin; the happier you'll be over the long haul. It's best to
begin sparing and contributing when you begin gaining cash. The control and abilities you
learn will profit you for whatever remains of your life. In any case, regardless of how old you
are the point at which you begin considering sparing and contributing, it's never past the point
where it is possible to start. There are two convincing motivation to spare utilizing chits A
higher rate of return in contrast with a bank store. They are fluid in nature. A chit can be utilized
to meet any unanticipated use. It can likewise be utilized to meet an arranged consumption. A
chit is the main monetary item that enables you to spare and acquire. The rate of return
produced by sparing utilizing a chit is a lot higher than what is offered by banks. The hazard
associated with sparing utilizing a chit would rely upon the chit subsidize organization. We
would prescribe utilizing an enlisted chit subsidize organization which has been working for
something like 10 years or more with a demonstrated reputation. While stopping your well-
deserved cash as a settled store with a bank would involve no or immaterial hazard and
correspondingly create less returns, turning your assets utilizing a chit reserve would involve
generally safe while producing 12-16% returns every year relying on which month you lift the
chit. A clever financial specialist is one who enhances his hazard portfolio. Whole extra cash
or surplus salary ought not be put resources into any one single money related item alone.
Speculations must be spread crosswise over different money related items like Protection,
Stocks, Shared Assets, Bank Stores and Chits. The individual financial specialist should act
reliably as a speculator and not as a theorist. This implies he ought to have the capacity to
legitimize each buy he makes and each value he pays by generic, target thinking that fulfils
him that he is getting more than his cash's value for his buy – Check Cuban

Education and Marriage

For a greater part of Indians, Training and Marriage of their kids are of prime significance.
Expanding instruction costs the distance from essential tutoring to advanced education and past
puts the onus on guardians to get ready for such costs from the earliest starting point. Taking a
training advance is costly in India. Financing costs charged by banks on a training advances
are a lot higher than home credits since there is no unmistakable security for the bank when the
advance is endorsed. Putting reliably in chits would enable a parent to meet the instruction
costs of their kids. Relational unions in India are a costly undertaking. They might be made in
paradise yet must be paid for on earth. Since marriage is inescapable, it must be gotten ready
for, all the more so on account of a young lady kid. Chit Assets can give the liquidity that is
required to subsidize a wedding at a much lower premium expense in examination with bank
credit.

Individual / Family

We all might want to claim a Vehicle, a Home, Land, a PC a LCD television and heap different
belongings to make our life worth living. It is conceivable to claim each possible extravagance
with legitimate monetary arranging. In short you can satisfy each fantasy with appropriate
money related control. Putting a bit of your salary in chits would enable you to claim any device
or vehicle arrive and different resources and so on you have been excited about having. A
likened regularly scheduled payment (EMI) offered by a retail outlet would incorporate
shrouded charges and intrigue costs. Above all, the advantage itself is sold/hypothecated to the
fund organization or retail outlet offering such EMI. Arranging through a chit store would not
involve any such hypothecation and the intrigue cost would be equivalent or not as much as
what is offered by the retail outlet or fund organization.

Types of Chit Funds

There are various kinds of chit funds. Some of the major ones include:

Organized Chit Funds: In North India, a typical kind of chit subsidize is the place little paper
slips with every part name are assembled in a crate. At the point when every one of the
individuals meet up for a month to month or a week after week meeting, the person who is in
control—before all the present individuals—picks a paper slip from the crate. The part so chose
gets that day's entire gathering. Thereafter, that individual's name slip is expelled from the case.
From that point forward, the recently chosen individual goes to the gatherings and pays his/her
offer, however his/her name won't be chosen once more.

Special Purpose Funds: Some chit reserves are composed as a sparing plan for a much-
indicated reason. For instance, the Diwali desserts subsidize, which has a quite certain end date
which is about seven days before Diwali. Neighbourhood women all pool their investment
funds every week. They utilize this gathered whole to purchase and get ready desserts in mass
just before the Diwali celebration, and they circulate the desserts among every one of the
individuals. Readiness of Diwali desserts can be a tedious and expensive undertaking for
people. Such a chit can lessen the expense and calms the individuals from additional work in
the bustling celebration season. These days, such uncommon reason chit reserves are directed
by gem specialists, kitchenware shops, and so forth to advance their products.

Online Chit Funds: With the entry of internet business in India, Chit reserves are being sorted
out online too. Online chit reserves compose barters on the web, and supporters can pay their
month to month commitments and get the prize cash through online exchanges including
electronic finances exchange framework. Every part inspires an online record to oversee and
course chit reserves.

Laws that Govern Chit Funds

Chit assets in India are administered by different State or central laws. Sorted out chit support
plans are required to be enlisted with a Recorder or Firms, Social orders, and Chits. The chit
reserves are represented by the accompanying laws:

Union Government – Chit Funds Act, 1982 (Except the State of Jammu and Kashmir)

Tamil Nadu Chit Funds Act, 1961

The Chit Funds (Karnataka) Rules, 1983

Delhi Chit Funds Rules, 2007

Maharashtra Chit Fund Act, 1975

West Bengal Protection of Interest of Depositors in Financial Establishments Bill, 2013

Prize Chits and Money Circulation Schemes (Banning) Act, 1978

The Hold Bank of India (RBI) is the controller of banks and other non-managing an account
money related organization, yet it doesn't control the chit finance business. Notwithstanding
the way that chit reserves acknowledge stores, the term 'store' as characterized by the Hold
Bank of India Act, 1934 does not involve the membership to chits. In any case, the RBI can
generally direct State Governments on the administrative parts of the production of tenets or
exception of certain chit reserves. The most recent rules given by the RBI with respect to the
Chit are given in RBI/2014-15/636.

As the controller and controller of the securities showcase, SEBI directs and oversees aggregate
venture plans. Be that as it may, the SEBI Demonstration, 1992 explicitly blocks chit assets
from their meaning of aggregate speculation plans.
Counteractive action of Illegal tax avoidance (Correction) Act, 2012 has perceived Chit Assets
in Area 2(l).

Under Prize Chits and Cash Course Plan (Prohibiting) Act, 1978 (PCMCS) 'Traditional Chit,
'i.e., the chit referenced above has been characterized in Segment 2(a). In this demonstration,
another kind of chit has additionally been characterized under Area 2(e) named as 'Prize Chit'
and it is prohibited in the region of India. Prize chit is unique in relation to traditional chit as
prize chit includes the closeout of declarations, units, and different instruments and there is an
affirmation charge additionally, though, regular chit does not contain any of those highlights.

Types of chit funds in India

Chit support is a sparing s plot commonly found in India. These are overseen, directed, and
controlled by Chit Finances Demonstration of 1982. In India there are three kinds of chit
reserves, in particular: I) reserves kept running by state governments; ii) private enrolled chit
assets; and iii) unregistered chit reserves.

In spite of the fact that chit assets in India are under the administration of focal enactment, state
governments are in charge of their organization. Principles and their execution rest with state
governments. Truth be told, under the watchful eye of Incomparable Court decision of 1982
chit reserves were especially prominent in South Indian states. In Tamil Nadu such assets were
guided by Tamil Nadu Chit Supports Demonstration of 1961; Maharashtra Chit Subsidizes
Demonstration of 1975 was in task in Maharashtra; and in Kerala, the Kerala Chitties Act 1975
directed these assets.

Chit funds run by state governments

Chit reserves oversaw and directed by state governments are incorporated into this
classification. Indeed, even those kept running by PSUs (open division endeavors) have a place
with this class. These are protected and odds of misfortune are restricted. Business forms are
straightforward and clean. Partaking in such assets is sheltered and secured to a noteworthy
degree. Mysore Deals Global Constrained (MSIL) and Kerala State Budgetary Endeavors
(KSFE) are instances of government overseen chit reserves.

Private registered chit funds

These chit reserves appeared during the 1980s and are enrolled according to Chit Subsidizes
Demonstration of 1982. These are regularly drifted by noticeable money related organizations
or business houses. Taking an interest in these assets isn't as sheltered as in state governments
or open division endeavours. Be that as it may, as they are under the administration of driving
private segment organizations or establishments the hazard is determined and tolerable. Adding
to chit reserves are liable to showcase dangers and conditions. There are numerous co-agent
social orders that likewise lead chit reserves. Shriram Chits of Shriram Gathering, and
Margadarsi Chit of Romoji Rao assemble are among the notable private enlisted chit finance
organizations.

Unregistered chit funds

Unregistered chit reserves are not lawful and interest in these is up to the danger of individuals.
Such chit reserves are normal all through India and are generally shaped by a nearby gathering
of partners. Development and the board of these chit reserves are completely founded on trust.
Support in these assets ought to be maintained a strategic distance from as debate are liable to
individuals' uprightness and trustworthiness. Shockingly the quantity of unregistered chit assets
in India is critical.

Investment in government or enlisted chit reserves is bound by guidelines of Chit Supports Act
1982. There are explicit rules with respect to foreman's bonus, least prize cash for each offer,
and individuals' conduct. As indicated by the Demonstration each recipient must vow security
for any effective offer. This guarantee could be as gold, property, National Funds
Authentications (NSCs), securities, or protection arrangements. Individual assurance from
whatever other part who has not gotten any prize cash may likewise be kept as security. This
security is to guarantee interest of individuals till the finish of a chit store's term period. Or the
consequences will be severe, individuals tend to leave a chit finance once they get their prize
cash.
 CHAPTER-2

COMPANY PROFILE/ INDUSTRY/RESPONDENTS

CHAPTER-3

DESIGN OF PROJECT REPORT

LITERATURE REVIEW AND RESEARCH DESIGN

REVIEW OF LITERATURE
RESEARCH DESIGN

 Research design is the plan, structure and strategy of investigation conceived so as

to obtain answers to research question.
 There are two types of research design. One is exploratory research and other is
descriptive research

TITLE OF THE STUDY

Chit fund means a transaction which a person enters into an agreement with a specified number
of person that every one of the shall subscribe a certain sum of money by way of periodical
instalments over a definite period & that each such subscriber shall in his turn as determined
by lot or by auction entitled to the prized amount.

A chit fund is a type of circulating savings among people in India. Chit fund schemes
may be organized by financial institutions or unorganized by people chit funds runs under the
legal act called chit fund act 1982. Chit fund may be private chit fund or public chit fund.
private chit fund does not regulate under the RBI but rules and policies made by RBI will be
followed. And in other hand public chit fund are regulated by the RBI and rules, policies made
by the RBI should be followed under the chit fund act 1982.

This study is being to identify the customer preference towards public or private chit fund.
chit fund is associated with more risk and there are more possibilities of fraud. Here in this
situation how the customer will act towards chit fund is the main focus of the study, whether
the customer will prefer public or private chit fund.

STATEMENT OF THE PROBLEM

A chit fund is a type of circulating savings among people and enters into an agreement for
the prize amount but the risk is more associated, therefore the problem is whether the customers
are giving preference to private or public chit fund.
OBJECTIVES OF THE STUDY

1. To identify the factors influencing customer preference towards public or private chit
fund.
2. To explore customer perception of the risks associated in the chit fund.
3. To know the working pattern of public and private chit funds.

RESEARCH METHODOLOGY

Research methodology is a way to systematically solve the research problem. It is understood

as science of studying how research is done scientifically. It guides and analyses the various
steps of the research along with the logic behind them. It is the framework, which specifies the
type of information to be collected, sources of information and the techniques for data analysis.

The data collected for the study of the project involves both the primary and secondary source
of data. The primary data collected is mainly based on the observations and interaction made
with the agents and customers. And the secondary data is collected through various sources
such as fact sheets, pamphlets, magazines, newspaper and from the websites of the respective.

DATA COLLECTION

The study is mainly based on the data collection from primary as well as secondary sources.

PRIMARY DATA

Primary data is collected through interviewing the respondents and taking their responses
through questionnaire issued to them. Researcher can expect straight answers to the questions.
The respondents are informed about the significance of the study and requested to give their
fair opinions.

SECONDARY DATA

The fact sheets are issued by the Reliance Insurance Company updated periodically on the
various information of the schemes. It involves portfolio of the Life insurance scheme, sectoral
allocation, performance compared to their benchmarks over a period of time etc acted as a
complete profile about the facts and features of the various Insurance schemes of the Reliance
Insurance company

SAMPLE DESIGN

The study will compare

PLAN OF ANALYSIS

 The data will be analysed by the statistics data provided by the responders in the
questioner.

 The data analysis will be represented in tabular form and various graphical
representations charts
such as bar charts, pie charts, diagrams

CHAPTER-4

DATA ANALYSIS AND INTERPRETATION

 CHAPTER-5

SUMMARY OF FINDINGS, CONCLUSION AND

SUGGESTION

BIBLOGRAPHY

1 Simcox, “Primitive Civilization or Outlines of the History of Ownership in Archaic

Communities, Vol. I, Swan Sonenshein and Co., London (1894)
2 Subbarama Aiyar, “Economic Life in a Malabar Village. The Bangalore Printing and Publishing
Co. Ltd., Bangalore, (1925).
3 The Travancore Banking Enquiry Commission and Travancore Companies Act, (1938).
4 Banking Companies Act, (1949).
5 Logan, William. The Malabar Manual, 1887, reprinted as Malabar by the Government of
Madras, Vol.1, (1951).