How to start and register your chit fund company?

May 16, 2024

Own the best microfinance institution to fund young and budding entrepreneurs with Chit Funds Schemes

There is a silent rise in the financial services industries. Everybody is moving from a regular 9–5 jobs to start a business of their own. They aspire everybody around the world in building startup companies. In India, NASSCOM reports that about 1200 startups came into the business market in 2018.

But the seed funding for the startups has reduced from USD 191 million in 2017 to USD 151 million in 2018. Seed funding is important to stage while young entrepreneurs go out and build their business. The decrease in the funding points that many budding business owners are looking for less risk inherent factors but more funds.

Lok Capital, founders Donald Peck, and Rajiv Lal state, “We are looking at investment opportunities that will expand financial inclusion, and chit funds are one. The chit fund model is unique, and it has a lot of advantages, with elements of savings”. This proves even the biggest giants are looking for chit fund investment.

if you are looking to own a chit fund business, now is the best time. Also, the fintech companies are emerging rapidly technical equipment will be easier. But if you have a dream to support many young businesses, let us do it right.

We have found how to set up your own chit fund business and scale them to a bigger MFI from scratch.

First chit fund business is common in the south side. Fund management was popular among the domestic households, for building houses, saving up for a marriage or loaning the savings from the chits (to outsiders) to gain the interest as a source of income. Chit fund business industry has estimated to 35,000 crore turnover annually.

For newbies who are hearing about chit fund business for the first time, “Chit funds and it’s business operation” will clear major of the words that sound like an alien language.

Chit Fund is a safe microfinance model and regulated by RBI with Chit Funds Act, 1982 and enforced across states in India. So, to register your company will take some legal works and verification process.

Documents for registering the chit fund company

At an earlier stage, you will require an address and ID verification proofs like

• PAN card
• ID proof
• Bank statement/Electricity bill/Mobile bill/telephone bill — Anyone.
• Other documents as per Chit registrar.
• Ownership document or rent agreement
• Electricity bill
• Copy of NOC
  

But there are other important documents required as per the chit fund registrar. And they are bit complex procedure. Let us look at the procedure step-by-step.

Register as Private Limited Company & Chit Fund Company

Any business to make them as legal, you will require registering them. There are many small-scale entrepreneurs who don’t register their business, but while they wanted to expand them into a huge enterprise, equipped with some technical advancements, the registering process delays their goals. So before anything, registering your chit fund company should be on the top of your to-listed.

The process is of two steps. First, register your chit company as a private limited company. When you have successfully registered it as Private Limited Company in India under the companies act, with the license you can apply for registering as chit fund company to chit registrar.

Every state has a chit registrar and registers your private limited company as chit fund company to them.

To get registered as a private limited company and as a chit fund company, you will need,

Digital Signature and DIN number

The foremost step to register your business as a company in India, you will need to apply to get a DSC and DIN. You can get digital signatures in the website of a Certifying Authority licensed to issue Digital Certificates in India.