Chit funds are often misunderstood due to a lack of awareness among people and historical misuse by unregulated operators, which grab the headlines of newspapers and spark curiosity in social circles. But if used correctly, they can be one of the most reliable financial back-up plans.
So, here let’s set the record straight to remove misconceptions among people.
Let’s explore and understand some of the most common myths surrounding chit funds. We will also understand how Kapil Chits ensures safety, transparency, and compliance.
Myth 1: People Think Chit Funds Are Not Safe or Legal
There have been a few unfortunate instances in the past that negatively portray the chit fund business. There are a handful of examples of scams where people were cheated by operators or companies. And, they were able to do so because subscribers invest their money with unregulated companies. When you save with a trusted company like Kapil Chits, you can rest assured knowing it operates under the Chit Funds Act, 1982, and strictly follows all state government regulations.
All companies involved in the chit business in India must be registered with the Registrar of Chit. However, people still go to an unregistered individual or a company, risking their hard-earned money.
Myth 2: Winning Early Means You Will Lose Money
Some think that winning early means a big loss due to the discount. But early winners get money when they need it most, and they can utilize the efficiency to fulfill the purpose of taking part in the auction. Moreover, the dividends they receive will help balance out the cost over time.
Myth 3: Chit Funds Are Fraud or Scams
This is the most common myth that gets passed around by people when it comes to chit funds.
This is the Chit funds and Ponzi schemes are not the same. Chit funds work by pooling money from members and giving it out through monthly auctions. Ponzi schemes depend on new investors to pay old ones, which is illegal and unsustainable.
Kapil Chits runs on a transparent system where every contribution and payout is properly recorded and available to members.
Myth 3: People Think They Can’t See Where the Money Goes
People worry they can’t track their money in chit funds. But trusted companies provide real-time updates on contributions, auctions, and payouts.
With Kapil Chits, all members can check their fund status anytime using the mobile app or website.
Myth 5: Chit Funds Are Only for Villages and Small Towns
Chit funds are used across India, not just in rural areas. Today, salaried professionals, business owners, and families in cities also use them.
Chits are very much relevant for Millennials and Gen Z, the key drivers of today’s financial habits. These days, young urban professionals prefer chit funds as they serve a dual purpose.
Kapil Chits offers digital access and flexible plans to suit people in both cities and towns.