How To Start a Chit Group

In accordance with the Madras Chit Fund Act, 1961 and Delhi Chit Fund Rules, 1964, no person shall start or conduct any chit or publish any notice, circular, prospectus or other documents containing the terms and conditions of any chit, or inviting the public to subscribe for tickets in any chit, the bye-laws of which have not been registered.

In accordance with Section 7 of the Madras Chit Fund Act, 1961 as extended to NCT of Delhi, " No person shall commence any auction or draw of any chit unless he has obtained a certificate of commencement from the Registrar, Chit Funds ".

Whenever you wish to start a new chit group, you have to get bye-laws for that particular chit group registered with the Registrar, Chit Funds.

To get certificate of commencement:

After the Bye-laws of a chit group are approved by the Registrar, Chit Funds and the company wishes to start the particular chit group, they have to keep in mind the following things before enrolment of subscribers:-

i) All subscribers should be adults.
ii) All subscribers must be having their regular source of income.
iii) In case of a Company applying for a subscription it shall subscribe for only one ticket in one particular group.
iv) No person can subscribe  normally for more than two tickets in one particular group.
v) If any subscriber is related to any Director of the company, information should be given to the Registrar Chit Fund in Circular No. 11.

(A) Documents required for obtaining the certificate of commencement:

i) Form CF-V duly filled.
ii) Non-judicial stamp papers worth 1% of chit value to be purchased in favour of the company (stamp papers should not be more than six months old).
iii) Agreements of each subscriber (in duplicate) duly adhesive stamped (Re.1/-stamp)by the Collector of Stamps, Delhi ( the date of stamping should not be prior to six months from the date of execution of chit agreement).
iv) Duplicate list of subscribers with name, father’s/husband’s name, complete address and ticket no. alongwith the following certificate:

"Certified that all the subscribers mentioned in the above list are adults and have a regular source of income".

v) Security like FDR of half of the amount of the chit value pledged in the following manners:

"Registrar of Chit Funds, New Delhi A/C. of M/S. (Name of the Company) FDRs issued by any scheduled bank of Delhi. Other Govt. securities as well as security in the shape of immovable property are acceptable".

vi) Circular No. 11:

"This is to certify that none of the subscribers mentioned in the list of chit group No.__________are directly or indirectly related to the Foreman or any Director of the company except Ticket No.____________."

vii) Covering Letter.

(B) Form of chit agreement:

Every Chit Agreement shall be in duplicate and shall be signed by the subscribers or by persons authorised on their behalf in writing by the subscribers, the foreman and attested by at least two witnesses. It shall contain the following particulars :-

i) The full name and the permanent residential address of every subscriber;
ii) The details of tickets held by each subscriber;
iii) The number of instalments and the amount payable in respect of each ticket for each instalment;
iv) The dates of commencement and termination of the chit;
v) The mode of ascertaining the prized subscriber;
vi) The amount of discount which the prized subscriber at any instalment has to forego;
vii) The mode and proportion in which the discount is distributable by way of dividend, Foreman’s commission and other expenses, if any;
viii) The date, time and place at which the chit is to be drawn;
ix) If under the chit agreement, the foreman is entitled to the chit amount, the instalment at which the foreman is to get the chit amount;
x) The manner in which a chit shall be continued, in case the foreman who is an individual dies or becomes of unsound mind;
xi) The approved bank or banks in which chit money shall be deposited by the foreman under the provisions of the Act and;
xii) Any particulars which may be prescribed;

The Registrar, upon being satisfied that the Bye-laws of the chit have been registered, chit agreement has been filled and the security required under Section 12 has been furnished by the foreman, shall grant a certificate of Commencement in Form CF-III.


i) After having obtained the certificate of commencement the Act requires the Chit promoter to furnish to the subscribers a copy each of the Bye-Laws and chit agreement certified by company to be a true copy. This must be done not later than the date of first draw of the chit.
ii) No clause in the chit agreement shall be altered, added to or cancelled by the company except with the consent in writing of the Registrar, Chit Funds and all the subscribers of the chit.

  • Agreement in duplicate of each subscriber duly adhesive stamped.
  • Security like FDR of half of the amount of the chit value in favour of Registrar of Chit Funds, New Delhi A/C. of M/S. (Name of the co.) or other Govt. security as well as security in the shape of immovable property.
  • List of subscribers in duplicate with full name complete address and ticket No. allotted alongwith the following certificates:-.

          ‘certified that all the subscribers mentioned in the above list are Adult and              having Regular Source of Income’

  • Non-judicial paper of 1% of Chit Value to be purchased in the name of the co.
  • CF-V Form duly filled in.
  • Circular No. 11:

          ‘This is to certify that none of the subscribers mentioned in the list are directly              or indirectly related to the Foreman or any Director of the co. except ticket              No."--------"

  • Covering Letter.

(C) Minutes of Proceedings of Auction Chit(s)

The minutes of proceedings of each auction will be prepared by the foreman and shall contain inter alia the following details:

a) Name and address of the foreman.
b) Reference No. and year of chit.
c) No. of all installment to which the proceedings relate.
d) Date, time and place of the draw of the chit.
e) Name of subscribers present at the auction.
f) Reading and recording of the minutes by the foreman.
g) Full particulars regarding the disposal of the prize amount, in respect of the preceding installment(s) and disposal of unpaid prized amount, if any, in respect of any previous installment(s).
h) Name(s) of the person or persons who become entitled to the prized amount in the installment.
i) The details of the bids offered (including the highest bid).
j) Name of the prized subscriber, prize amount, discount, foreman’s commission etc.
k) Details of objections, if any, raised by any subscriber and with what results.
l) Certificate to be given by the prized subscriber of previous auction regarding receipts of payment in time.
m) The Registrar, from time to time may, require a foreman to state such other particulars in the minutes of proceedings which he deems proper for the safe and fair conduct of a draw.
n) The proceedings shall be signed by the foreman and all the subscribers present at the draw of the installment to which they relate.

(D) Submission of minutes

A copy of the minutes so prepared will be submitted with the Registrar, Chit Funds, Delhi by or with in the 15th day of the month succeeding the month in which auction was held.

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