The Value of the Chit is Rs.1,00,000/- This amount is known as the Chit Value.
For the purpose of the illustration we will consider the duration of the chit to be 20 months. This is known as Term Period for the chit group.
The Foreman or Chit Fund Company has to gather 20 people who are interested in investing in this chit group. These 20 persons are called Subscribers.
Once the chit group commences, the foreman has to register the chit with the registrar of chits. He has to pay 100% of the chit value as security. This amount can be withdrawn only after the said chit group closes and every subscriber is paid what is due to him or her. This regulation protects the interests of the subscriber to a certain extent.
