Chit is a simple financial instrument which takes care of both savingand borrowingneeds of the customers. Chit funds are saving cum borrowing schemes, where member or subscriber agrees to contribute fixed amount every month for a fixed period. The total amount contributed by subscribers shall be auctioned and given as prize money to a needy subscriber every month.
Definition of chit fund varies from person to person. For one set of people, it is a money deposit/a saving cum investment scheme and for another set of people, it is a loan/credit scheme
All category of customers are Chit customers. The minimum age criteria is 18+ years.
Chit suits for all segments of customers like Upper Lower, Middle, Higher & High Net worth Individuals. Also, it caters the specific profiles like Salaried, Self Employed, Home Makers & Senior Citizens.
Monthly Income / Expenses Analysis | |||
---|---|---|---|
Income | Expenses | ||
Description | Value | Description | Value |
Net Salary | 30,000 | Rental Contribution | 5,000 |
Other Income if any | Food Expenses | 5,000 | |
Conveyance Expenses | 4,000 | ||
Family Contribution | 2,500 | ||
Phone Expenses | 1,250 | ||
Loan EMI Contribution | 3,000 | ||
Other Expenses | 1,250 | ||
Net Salary | 30,000 | Total Expenses | 22,000 |
Balance Available = (Net Salary – Total Expenses) | 8,000 | ||
Comfortable CHIT Instalment = (Balance Available)/2 | 4,000 |
Discontinuation of chit is loss to the customer, so analyse monthly income / expenses and suggest the correct chit group based on the comfortable Chit Instalment.
Customer can bring in a third person who is interested to subscribe / continue the chit in his/her place. If the prospect is acceptable to MPCIL, we will consent for transfer of chit from old subscriber (TRANSFEROR) to new subscriber (TRANSFEREE). This is also called assignment (substitution) of chit.
Customer is discontinuing the Chit by not making instalment, the Foreman commission of 5% of the Chit value with GST will be deducted. If any balance is available, then the same will be settled only after substitution or completion of Chit period, whichever is earlier.
Let us learn with an example of 10000* 50 = 5 lac Chit
In this case Rs.10000 is monthly Instalment, 50 is No of months and 5 lac is Chit value.
Always the Months & The Chit members of the group will be the same, so the members of the chit group will also be 50.
Min Bid Amount -5% (Foreman Commission), Max – 30% (for 30 & 40 months chit) and 35% (for 50 months Chit)
If someone withdraws at last
Total Amount Invested = 419500
Total Amount Received = 472000(5 lac – (FC + 12% of FC as GST)
Net Margin = 52500
Note :- The above calculation is for learning purpose, the actual return depends upon the auction discount as decided by the group members
The customer is eligible for Chit group auction from 2nd month onwards.
Before the auction, the Chit member should have paid all his instalments and there should not be any pending instalment in his Chit. If the customer has any pending instalment in his chit, then he will not be eligible to participate in the auction.
Future Liability is an important thing when it comes to Security.Future Liability (FL) = (Fixed Monthly Instalments X No of pending months)
Customer can opt any one or combination of the following:
Sl | Type of Security | Value Required | Remarks |
1 | Gold Ornaments | 100% of Future Liability | Valued currently at Rs.2500/gm |
2 | Assignment of Life Insurance Policies | Surrender Value should exceed100% of Future liability | Only traditional Policies are accepted. The subscriber needs to obtain surrender value certificate and assignment confirmation from LI Co |
3 | Equitable Mortgage by Deposit of Title Deeds (Regd) | The value of the property should exceed 150% of the future Liability | local immovable urban house property. Vacant land & rural properties are not accepted |
4 | Bank Guarantee | 100% of Future Liability | Scheduled bank acceptable to company |
5 | Fixed Deposits | 100% of Future Liability | The subscriber must obtain a lien charge from the Bank. |
6 | Paid up subscription in Non – Prized chits by Pledge of Pass Book | 100% of Future Liability | Paid up minus 5%of chit value only be considered |
7 | Deposits with the Group company | 100% of Future Liability | NCD, Debentures, FD etc – physical/dematerialised |
8 | Security Pledge- Dematerialized | 200% of Future Liability | Accepted Only NIFTY 100 shares |
9 | Personal Guarantee/Surety | Minimum of 3 qualified Persons Surety | No of surety may increase based on the profile & value of future liability |
Eligibility
FUTURE LIABILITIES | BASIC PAY |
---|---|
Upto Rs. 10,000/- | Rs. 4,500/- |
Over Rs. 10,000/- to Rs. 15,000/- | Rs, 5,000/- |
Over Rs. 15,000/- to Rs. 20,000/- | Rs. 5,000/- |
Over Rs. 20,000/- to Rs. 25,000/- | Rs. 6,000/- |
Over Rs. 25,000/- to Rs. 50,000/- | Rs. 6,500/- |
Over Rs. 50,000/- to Rs. 75,000/- | Rs. 8,000/- |
Over Rs. 75,000/- to Rs. 1,00,000/- | Rs. 8,500/- |
Over Rs. 1,00,000/- to Rs, 1,50,000/- | Rs. 9,000/- |
Over Rs. 1,50,000/- to Rs, 2,00,000/- | Rs. 11,000/- |
Over Rs. 2,00,000/- to Rs. 2,50,000/- | Rs. 12,500/- |
Over Rs. 2,50,000/- to Rs. 3,00,000/- | Rs. 14,500/- |
Over Rs. 3,00,000/- to Rs, 3,50,000/- | Rs. 15,500/- |
Over Rs. 3,50,000/- to Rs. 4,00,000/- | Rs. 17,000/- |
Over Rs. 4,50,000/- to Rs, 5,00,000/- | Rs. 18,000/- |
Over Rs. 5,00,000/- to Rs. 6,00,000/- | Rs. 20,000/- |
Over Rs. 6,00,000/- to Rs. 7,00,000/- | Rs. 23,000/- |
Over Rs. 7,00,000/- to Rs. 8,00,000/- | Rs. 24,500/- |
Over Rs. 8,00,000/- to Rs. 9,00,000/- | Rs.26,000/- |
Over Rs. 9,00,000/- to Rs. 10,00,000/- | Rs. 27,500/- |
Over Rs. 10,00,000/- to Rs. 10,00,000/- | Rs. 29,000/- |
Over Rs. 11,00,000/- to Rs. 12,00,000/- | Rs. 33,000/- |
Over Rs. 12,00,000/- to Rs. 13,00,000/- | Rs. 33,000/- |
Over Rs. 13,00,000/- to Rs, 14,00,000/- | Rs. 34,500/- |
Over Rs. 14,00,000/- to Rs, 15,00,000/- | Rs. 36,000/- |
Over Rs. 15,00,000/- to Rs, 16,00,000/- | Rs. 37,500/- |
Over Rs. 16,00,000/- to Rs. 17,00,000/- | Rs. 39,000/- |
Over Rs. 17,00,000/- to Rs. 18,00,000/- | Rs. 40,500/- |
Over Rs. 18,00,000/- to Rs. 19,00,000/- | Rs. 42,000/- |
Over Rs. 19,00,000/- to Rs. 20,00,000/- | Rs. 43,500/- |
Up to 10 lac Liability
Liability Slab (Rs) | Govt Employee | Pvt Sector Employee & Business Person/others |
Below 3 lac | Minimum of 1 Property document – Best efforts basis | Minimum of 1 Property document – Best efforts basis |
3 lac to less than 5 lac | Minimum of 1 Property document – Best efforts basis | Minimum of 1 property document – Mandatory |
5 lac to 10 lac | Minimum of 1 property document – Mandatory | Minimum of 2 property document(2 persons) – Mandatory |
Note :-
Property Documents means person should own property & submit required proof like copy of tittle deed, EC, tax receipt, Electricity bill etc. If Prized Subscriber and all guarantors are govt employees, then only the conditions applicable to Govt employees will apply. If any of them are non govt employees, the conditions applicable to Pvt Sector employees & business person will apply |
NOTE- More than 10 lac Chit, consult respective Chit Branch Manager in closing the deal.
General Points | |
Personal surety of Minimum four persons | |
Branch Manager/Area Manager/Key Accounts manager/Credit Manager should meet prospective Subscriber /visit his /her business place & Office /scrutinize the papers and get satisfied before Enrolment | |
Subscriber & Guarantors should be income tax assesses. | |
Copy of bank statement of account for minimum 12 months period (Salaried people – where salary is credited, business people – business account) | |
Minimum of 3 people among the Subscriber & Guarantors should have property documents. It should be urban residential or commercial property and not vacant site. They must submit copy of the tittle deed/Encumbrance Certificate/Tax Paid Receipt/Electricity Bill of 3 properties. | |
Surety of business Persons | |
Subscriber & Sureties must be in business for a minimum period of 10 years. Balance Sheet and Profit & Loss A/c and IT returns with Computation Sheet and auditors report for latest 3 years should be available. | |
Net profit should be Rs. 10 Lakhs & above for all 3 years. Net profit of Rs.5 Lakhs & above for all 3 years can be considered along with copy of Property documents. | |
Successful bidder or at least one of the sureties must have residential property with NIL encumbrance (without loan on the property) in 50 KM radius from Chit office. Copy of tittle deed with forced Sale value of 150% of liability along with NIL Encumbrance Certificate (not older than one month) should be submitted. | |
Surety of employees | |
1 | Private Employees – Minimum Service of 7 years with take home pay after all deductions and loan EMIs should be minimum of Rs. 50,000/-
Govt Employees – Permanent employees with take home pay after all deductions and loan EMIs should be minimum of Rs. 50,000/- |
2 | CIBIL Score of subscriber & guarantors should be above 650 & above. |
3 | Subscriber & guarantors should be residents within a radius of 50 KM from Chit Office. |
Apart from filling/executing internal documents, applicant must submit the KYC document as specified below
A. KYC Documents – Mandatory with all class of Security from both Subscriber/s & Guarantors |
Identity / Age Proof – Copy of Aadhar Card / Voter ID / PAN Card / Passport (Self attested) |
Address Proof – Copy of Aadhar Card / Voter ID / Passport / Gas Bill / Electricity Bill / Mobile Bill (Self Attested) |
Permanent Address Proof – Copy of Aadhar Card / Voter ID / Passport / Gas Bill / Electricity Bill / House Tax receipt (Self attested) |
*# Copy of House / Property – latest Tax paid receipt |
Note: – *# Mandatory in the case of Personal Guarantee/Surety (19.1) ONLY. Other cases on best effort basis
Also, required income document specified below, if the applicant is opted Security option as “Personal Surety”
B. Income Documents | |
For Employees: | For businessperson/s/professionals/others |
Copy of Employee ID Card | Copy of GST Certificate / Licenses / Govt approvals |
Computerized Pay slip / Salary Certificate (self-attested) / with disbursing officer attestation for latest 3 months | Copy of Proof of business established for 10 years |
Copy of Bank Account statement for latest one year (self-attested) – salary account | Copy of Bank Account statement for latest one year (Self attested) – business account |
Copy of Form No. 16 issued by Employer (for latest 3 years) | Copy of Audited Balance Sheet / Profit & Loss Account / adjusted statement of income certified by auditor, GST Returns for latest 3 years |
Copy of Income Tax Return for latest 3 years with Acknowledgment / income computation (Self attested) |