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PanasunaChits (P) Ltd. · Est. 1975

How chits work.

A chit fund is a savings scheme practised in India for centuries. It began as an informal association of traders and households within communities, and it lets people of modest means turn small, regular savings into a lump sum.

How a chit works, in five stages.

Follow one real Panasuna group from the day it forms to the day a member takes the chit amount home.

Compare with FDs, loans and credit cards

Stage 1 / 5

  1. Stage 1 / 5

    Join a chit group

    Choose a plan and join its group. A group has as many members as the plan has months — a 40-month chit has 40 members. Everyone pays the same monthly subscription, so together the group pools the full chit value every month. The value, duration and subscription are written into the chit agreement you sign.

    Members
    40
    Each pays monthly
    ₹25,000
    Pooled every month
    ₹10,00,000
    Duration
    40 months

  2. Stage 2 / 5

    Pay monthly installments

    Each member pays one fixed monthly installment into the common pool, for the life of the chit. Our collection team comes to your doorstep each month. After every auction, your dividend is deducted, so the next month's installment is smaller.

    Collected at your doorstep

    Fixed monthly installments only

    Monthly subscription
    ₹25,000
    Over the chit, before dividends
    ₹10,00,000

  3. Stage 3 / 5

    Participate in the auction

    Every month the group holds an open auction for that month's chit. A member who needs the money now bids by offering a discount — the part of the chit value they are willing to give up, also called the foregone amount. The discount cannot exceed 40% of the chit value.

    Winning discount in this example
    ₹2,00,000 · 20%
    Most a bidder may give up
    ₹4,00,000 · 40%

  4. Stage 4 / 5

    Determine the successful bidder

    The member offering the highest discount, within the chit agreement and the Chit Funds Act, becomes the successful bidder, and we communicate the bid details promptly. The discount, less the foreman's commission, is shared equally among all members as a dividend — so everyone's next installment falls.

    Foreman's commission (assumed 5%)
    ₹50,000
    Dividend pool
    ₹1,50,000
    Each member's dividend
    ₹3,750
    Next month's installment
    ₹21,250

  5. Stage 5 / 5

    Receive the chit amount

    The successful bidder receives the chit value less their discount, paid on time. As installments are still due, they first provide the documents and surety the chit agreement requires. All along, Panasuna keeps a security deposit equal to 100% of the chit value in a Scheduled Bank as an FDR.

    Paid to the successful bidder
    ₹8,00,000
    Bank FDR security, 100% of the chit
    ₹10,00,000

Example group: ₹10,00,000 · 40 months · ₹25,000/mo. A real Panasuna plan. The 20% winning discount is an illustration; real bids vary every month.

Try other bids in the auction simulatorSee the whole cycle in the calculator

Why people invest in chit funds

  • 01Simple to join, with minimal formalities
  • 02Attractive returns through dividends
  • 03Start with a small monthly deposit
  • 04A borrowing-cum-savings instrument

A chit, against the other tools.

Six ways people save, borrow and invest — and how a chit compares with each, point by point.

A smart investor follows

SAVE – BORROW – PAY

  1. 01SaveEarn more on your savings
  2. 02BorrowBorrow at a lower cost
  3. 03PayEscape exorbitant interest

instead of

BUY NOW – PAY LATER

The vicious cycle

  1. Buy more than you can afford
  2. Pay the minimum due
  3. Roll the rest into next month
  4. Interest of 36–42% a year

Chits vs credit cards

Revolving card interest 36–42%

SAVE – BORROW – PAYinstead ofBUY NOW – PAY LATER

1975Chit

  • A smart investor follows the SAVE–BORROW–PAY mantra instead of BUY NOW–PAY LATER.
  • Earn more on your savings, borrow at a lower cost, and escape exorbitant interest charges.
  • It all comes from financial discipline: planning, investing, saving and borrowing through chits.

Credit cards

  • BUY NOW–PAY LATER tempts you to spend more than you can actually afford.
  • Banks extend high credit limits without much thought to your ability to repay.
  • The trap: buy more than you can afford, pay the minimum due, roll the rest into next month — a vicious cycle.
  • Few realise that a revolving balance is charged 36–42% a year, or 3.0–3.5% every month.
  • You end up caught in a credit card debt trap.
Interest at a glanceInterest rate, % a year

What your savings earn

  • Panasuna chit (saver)8–12%Effective dividend gain for patient savers, through monthly auction dividends. No lock-in penalty.

What borrowing costs you

  • Panasuna chit (early bidder)10–14%Effective net cost for early bidders: accumulated dividends offset the bid discount, with zero prepayment penalty and no bank processing charges.

A chit has no fixed rate. Savers earn dividends from each month's bidding; early bidders see those dividends offset the bid discount. One instrument, both sides: SAVE – BORROW – PAY.

See how in the auction simulator

Indicative ranges, % a year; rates vary by bank, borrower and group, and chit dividends depend on each month's auction and are not guaranteed. Check current rates before you decide.

Ready to find your chit?

Find your chitOpen the calculator