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Agreement Of Chit
The concept of the Chit Fund is based on the principle of reciprocity, in which a group of people participates in a system to contribute to fixed periodic amounts and distribute the amount thus collected to each of the participants in turn. The foreman, that is, the Chit Fund Company itself, implements this scheme of a Chit fund. Example: The operation of the Chit funds is best explained with the help of an example. Take a typical chit fund with 25 members who contribute rs 100 per week. This fund lasts 25 weeks. In the first week, all members donate Rs 100. An auction meeting will be organized, through which the foreman of the Chit fund presided. The total amount is Rs 2500. The auction starts with this amount. Bidders begin to bid by disconseigning this amount (Reverse Bidding).
Consider that the lowest offer of a person is Rs 2,150 (a discount of Rs 350). This amount (Rs 2,150) is given to this successful bidder . . .