Total Number of Subscribers in the group will be equivalent to the number of months in the chit group.
25 Members join together and agree to contribute Rs. 4,000/- per month for 25 months. These monthly contributions are collected by the company and pooled together. Any member of the group (of 25) has the option to claim this pooled fund of Rs. 1,00,000. This is done through the system of auction. The member offering the highest discount in the auction becomes eligible to claim the amount of Rs. 1,00,000 less his discount.
The discount so offered by the successful member less the chit operator’s commissions is shared by all the members of the group i.e, 25 members. This share of discount is known as dividend. Instead of actual payment of dividend. The members are allowed to deduct this amount from the next monthly subscription.
Example: If the successful member has offered a discount of Rs. 30,000/- in the above group then the divident is calculated as under:
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This way the member will take the money in the order of their individual urgency. When the 25th member receives his money in the 25 months the chit comes to and end. After the above four factors have been determined and after the group gets register with the Government Authority, enlistment will begin. This is where you as an Agent come in. When you are informed that a new group is being floated and is ready, you will convince as many good clients as you can.
In the auction, the successful prized bidder will be determined by the mode of auction as applicable for the group. The successful bidder will receive the money after furnishing necessary security. This process will continue till all the subscribers receive their money.
