In India, a chit fund is a type of savings scheme where a group of individuals enters into an agreement to make periodic contributions of a specific amount of money over a set period. The chit fund company manages, conducts, or supervises the chit scheme, as defined in Section 2 of the Central Chit Funds Act, 1982.
The term “chit” refers to the transaction where each subscriber is entitled to a prize amount determined by lot, auction, tender, or another method specified in the chit agreement. This transaction is also known as a chit, chit fund, chitty, kuree, or any other name specified in the agreement. The Cental Chit Funds Act of 1982 regulates the operations of chit fund companies and protects the interests of subscribers.