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- Foreman = Chit fund company (Navashakthi Chits Pvt Ltd.)
- Term Period = Duration of the chit (Technically, this is equal to the number of subscribers)
- Subscribers = Members like you who register in the chit (50 members in this example)
- Monthly subscription = Amount you have to pay per month (10,000 in this example)
- Dividend = Chit discount you will get once a member wins the bid
- Chit value = Total sum of money from all the members/subscribers (10,000 x 50 = 5 lakhs
Existing law of chit funds is that the chit fund company must deposit 100% of the chit value with the Government, the Registrar of Chits before starting a chit fund. As a registered company, Navashakthi Chits Pvt Ltd. must first deposit 5 lakhs with the Registrar of Chits.