Chit fund is a kind of savings plays an important role in the financial development of people. It is system under which the periodical and regular savings of a group of subscribers are made available to each subscriber, a specified amount every month for a specified period.The Pooled funds every month are offered to the subscribers at monthly auctions and the subscriber who bids for the highest discount is declared the prize winner and given the prize on proper security.

A Prized subscriber also should continue to pay the subscriptions till the termination of the chit. The amount foregone as discount, less foremans commission is distributed among the subscribers as dividend.