How to Register a Chit Fund Company in Telangana
Here is an interesting research I did and would like to share.
A chit fund is a well known fund saving scheme in India. It is one of the major types of saving schemes in the unorganized money market industry of India. The company, that is the chit fund company that handles a chit fund, enables people to save and also enables them to lend from the chit fund company. So you can say the chit fund company is an organization that allows people to save and also gives out loans to individuals who cannot use banking facilities for one reason or another.
A chit fund company is a company established for the purpose of managing a chit fund. Such chit fund scheme may be operated by some financial institution who specializes mainly in dealings with chit funds, or it may even be operated by friends or relatives. Chit funds is ruled by the Chit Funds Act, 1982 in India and the Act covers their registration, supervision and operations.
As we all know by now, chit funds are run by the chit fund company. Persons dealing with the chit fund company in savings and borrowing is referred to as a member.
How to Register a Chit Fund Company in Telangana
Telangana is a town in India and so registration of chit fund companies in Telangana is covered by the Chit Funds Act of 1982.
To begin a chit fund business in India, the promoters of the chit fund company are required to first start a private limited liability company with the goal of running a chit fund.
Immediately this private limited liability company is created, it can then apply to the chit fund registrar of the State with the appropriate and correct documents to get registered.
Once registration with the relevant State registrar is completed, the new company can now begin operations of its chit fund business.
Qualifications of Promoters
The following class of people are not qualified to register a chit fund company and their application to do so will be refused:
1. People who are convicted of any kind of offence in the Chit Fund Act or in any other Act protecting the organization and sentenced to prison for any such offence.
2. People who were convicted of any other kind of offence that encompasses moral turpitude and were imprisoned for any of those kinds of offences, unless he/she has been released from prison for a period of five years or more.
3. People who have problems with payment of fees or the filing of any record required to be paid.
4. People who have violated any of the rules made under this act.
Documents Required for Registration
The documents that are required to start a chit fund business include:
1. Documents containing personal details of the Director to be.
Identity Cards
Aadhar card
International Passport
Drivers license
Voters identity card.
Proof of valid address
Bill of electricity
Telephone bill
Mobile bill
Most Recent bank statement
PAN card details
Most Recent passport photographs.
2. Documents of registered office.
Most recent electricity bill
Tenancy agreement
In case the building is rented
Deed of Sale
In case the building is owned by the operators.
How Does the Chit Fund Operate?
The members of a chit fund company are expected to make monthly contributions towards its operations. A company fee and a discount is then removed from the total contributions for the month and the rest is offered back to its members in an auction and called a chit. Members receive the chit auction amount in turns each month and a random selection is made whenever more than one member is interested in the chit.
Sometimes, none of the members might be interested in taking the money in which case the chit goes out without any discount and a reverse auction is undertaken. This means that the person who bids the lowest amount at the auction gets the chit for that month since no one wants it. All members get to take the chit auction amount once and the discount is shared among all of them while the company takes the company fee that had been deducted earlier to enable its further operations.
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