FAQs

faqs

Most Common Questions

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Is Flotus Chits a Registered Chit Fund Company?

Yes. Flotus Chits is a Registered Chit Fund Company and is hence regulated by the government departments.

What is the advantage of chit fund?Yes. Flotus Chits is a Registered Chit Fund Company and is hence regulated by the government departments.

Chit fund instils a discipline of periodic saving in a subscriber. In the event of financial need, withdrawals are easier and lucrative in chit funds. For subscribers who prefer to not withdraw early, the dividends from chit funds are higher than the returns from investment schemes such as Fixed Deposit, Mutual Fund and Recurring Deposit. Chit funds dividends are typically 12% to 18% per annum.

What is the difference between prized and non-prized subscribers?

A subscriber who has picked his chit or to whom the chit amount is paid is called a prized subscriber.

A subscriber who has not picked his chit or to whom the chit amount has not been paid yet is called a non-prized subscriber.

What is an auction?

Chit fund allows the subscribers to take the chit amount before the completion of the term. This is done through Auction. In an Auction, all the non-prized subscribers are allowed to bid up to the permissible discount. The non-prized subscriber who wants to take a chit amount at the highest permissible discount is identified. The difference between chit value and the amount at which a successful bidder takes a chit in the auction is known as auction discount or chit loss. The subscriber would have withdrawn more money from the company, than his payments thus far. He pays back the difference amount in periodic instalments until completion of the chit period.

What are the benefits to the Foreman/Chit Fund Company?

The Formean/Chit Fund Company gathers a group of subscribers to form a chit group, collects money from each subscriber every month, arranges pay-out of prized money to one person each month and ensures timely payments from prized subscribers. The Chit Fund Company earns 5% of the chit value as service charge for all the services rendered.

What are the income tax benefits of being a chits subscriber?

The chit loss can be deducted from the income from profession or business. The net surplus or dividends after completion of the chit period need to be offered as income, but some courts have ruled that this income is not subject to income tax.

What it the duration of the chits?

The duration of chits are 25 months, 30 months, 40 months and 50 months

Can payments be made in other branches of Flotus Chits?

Yes.

What is chit dividend?

The difference between the auction discount and the company commission (5% of chit value) gives the total group dividend which will be distributed equally amongst all the subscribers.

What is lottery?

When multiple non-prized subscribers want to take the chit amount at the maximum bid amount (decided at the inception of the group), the chit numbers of these non-prized subscribers are put in a container. The successful bidder is picked randomly. This is known as lottery (or lot).

Why are guarantors required for a subscriber?

Through auction, the subscriber withdraws more money from the company, than his payments thus far, with an understanding to repay the balance in future. In order to safe guard the interest of all the subscribers each month, the chit fund company insists upon the prized subscriber to provide guarantee for repayment of future instalments. Chit funds insist on minimum of three sureties or guarantors. They have to be Income tax assesses, such as government employees, private employees or businessmen. Alternatively, the subscriber can either pledge chits within Flotus Chits, pledge property, have bank guarantee or surrender LIC.

What happens when a subscriber defaults?

Subscribers who default in their periodic payments, will be charged a penalty.

Non-prized subscribers who default for consecutive three months will be removed. The net amount paid by the subscriber till date, minus 5% of chit value (for breach of contract between the Company and subscribers), minus GST and documentation charges, will be repaid to such defaulting subscribers. The defaulting subscriber will not reserve the rights to claim the Dividends.

Prized subscribers who default for a continuous period of three months, will be charged a penalty of 2% per month. Dividends will not be paid to the subscriber; and legal action will be initiated against the defaulting subscriber and his guarantors.

Can a subscriber withdraw from a chit group?

Yes. Withdrawals are permitted.

When a subscriber withdraws, the foreman has to find a replacement. Until the replacement is identified, the chit fund company has to arrange funds for payment to a prized subscriber each month. The amount paid by the subscriber in the chit minus 5% of chit value (for breach of contract between the Company and subscribers), minus GST and documentation charges, will be repaid to such a defaulting subscriber at the end of the chit period.

How many chits can a subscriber take in a chit group?

A subscriber can participate in utmost three chits in the same chit group.

What are the chit groups available with Flotus chits?

The chit groups vary from Rs.50,000 to Rs. 50,00,000.

What are the benefits of joining a vacant chit?

A member joining a vacant chit earns all the dividends receivable as of the day of his joining.

What are the modes of payment?

Accepted modes of payment include - Cash, cheques, demand draft, pay order and bank transfer.

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