What is Chit Fund

A chit fund is a type of rotating savings and agreement among different persons i.e. friends, relatives, neighbors and family members to subscribe a certain sum of money for a specified period of time. The Chit Funds in India are regulated by the Chit Fund Act, 1982.
Under the chit fund agreement; a certain amount is deposited on regular basis by the different persons; and after the gap of a specified period of time the amount is returned to the subscribers with interest.  Chit fund helps in collecting the small savings of the individuals which turns into a big amount.