It depends on the features of the scheme, benefit of the long-term investment and farsighted vision from the part of the investor. If you are investing your hard-owned money with a trusted chit funds company, you can easily get full repayment.  Many chit funds companies with a long working history have always performed well and always repaid investors in time.

Chit funds are a great source to grow your income reliably. Some chit funds companies offer you a discount on the installments, if you pay the installments on time.  There is also a scope to repay at any of their branches or collection from your doorstep. You can even use the virtual internet facility to pay the installments. Some chit funds  are also involved in social welfare activities. So, by joining them, you are actually helping improve the society besides stabilizing your financial future

When you join a chit fund, you are forced to save small parts of your monthly income into the schemes to maintain the integrity and continuity of the schemes for better returns and natural dividends. Borrowing from chit fund is also much easier compared to a bank. The chit loss is normally lower than the market interest rate.  An investor's return is also higher than the interest from bank on recurring deposits

One who has withdrew and withdrawn his chit or to whom the chit amount is paid is named as prized subscriber

One who has not withdrew and withdrawn his chit or to whom the chit amount has not been paid yet is named as non-prized subscriber.

Chit funds are somewhat like the recurring deposits in a bank. The chit funds are developed out of periodic pooled investments by a group of persons. People who subscribe to the group need to contribute an installment based on the value of the chit. The investments are already pre-calculated.

The dividends which you earn in a chit are non taxable. If a subscriber claims the bid as loss then these dividends has to be shown as revenue income in the assessment. Hence the entire dividend earned in a chit is not taxable if you don't claim the bid amount as loss.

Auction is process for identifying the non-prized subscriber who wants to take a chit amount at the highest permissible discount. All non-prized subscribers who have paid their installments upto date are allowed to participate in the auction for bidding the highest auction discount, within a period of five minutes, which is allowed for each auction.

When a subscriber withdraws, the chit fund company need to find a replacement in his place. Until then, the company need to arrange the funds on behalf of the person who has withdrawn. So, withdrawl is permitted, but the actual money paid by the subscriber in the chit other than the company commission will be repaid to the defaulter, at the end of the chit period.

A member usually submits securities based on the future liability of the chit. The common types of securities include -

Personal surety: Any salaried person working in State/Central Govt./ Public Limited Companies/Banks and other Reputed Companies will be taken as surety.

Pledge: Deposits with the company in chits or otherwise, net paid amount of which, after deducting foreman's commission should not be less than 1 1/3rd of the successful bidder's liability to the company.

Bank Guarantee: Guarantee given by the Schedule Bank in a schedule format can be submitted as surety.

Income Tax Assessor: Any person having I T Assessment for the past three years having business, profession etc will be taken as sureties.

Property Pledge: Deposit of title deeds of urban property can be submitted as surety. Third party property can also be given as surety.