On the application of 10 or more members,the Board of Directors may start and conduct chit fund to secure savings.the Board of Directors shall frame rules for that purpose subject to the following conditions:
- The number of members of single chit fund shall be not less than ten.
- The total amount of any chit fund shall not be more than Rs.25000/-.
- The period during which a chit is to run shall be not less than 10 and not more than 60 months.
- Every chit member must subscribe for at least one share but no member can take more than 5 shares.
- The method of disposal of a chit amount shall be under the auction system under which the pool or amount subscribed by all the members is knocked down to the member who bids the highest discount as consideration for drawing the pool.Where
- There is no bid the collection less 4% shall be lent to the members selected by casting lot,among all the members who have not already had loans under the system or when two or more members bid the same discount,selection by casting lots shall be made among them.
- The discount in disposing any chit fund shall be not less than 5% and not more than 30%.
- The Board of Directors shall have full discretion in the matter and the nature of security to be obtained from members to whom the chit amount is allotted.
- Any sum due to the Society by members who are also subscribers to a chit fund may at the discretion of the Board of Directors be deducted from the chit amount or discount or interest when it falls to them.