A chit fund is a type of rotating savings and credit association system practiced in India. In some variations of chit funds, the savings are for a specific purpose
A chit fund is both a savings and credit product. It bears a pre-determined value and is of a fixed duration.Each scheme admits a specific number of members whose monthly contributions adds up to the total value of the chit fund at the end of the term.
Chit funds let you borrow a lump sum amount without providing any formal collateral, as opposed to banks or other financial institutions. The rate of interest is also much lower than what a bank would offer.