A Chit Group starts with a formation of a group (subscribers) who contribute a fixed amount (installment) and the accumulated amount is taken by one of the members of that group who is prepared to disallow maximum amount.This discount allowed amount is called bid amount.
Out of the bid amount the group deducts a fixed amount (commission) and divides the balance amount equally to all the members of the group including the person who has bid the amount. Actually this dividend amount (dividend) will be credited to the account of all the members in the groups. The procedure of bidding the amount, contribution of installments etc. continues for a period, i.e. number of months equal to the number of members.
So, each member will be eligible to take the amount once during the period of chit. By the time the group completes each members of the group gets the amount once. Also the member who has taken the chit will not be eligible to participate in the bid during the succeeding months. But all the members irrespective of whether the amount is taken or not, should contribute for the installations for the whole duration.
