Chit Funds or Cheating Schemes?


Chit Funds or Cheating SchemesBy- Kiron Kakoty

Perhaps many of the readers of  Times of Assam are more knowledgeable that this humble KK about Chit funds and allied schemes. Few Indian provinces have government scheme Chitty which are possibly above board and outside my vivisection attempt in the next few paragraphs. Sharadha Chit fund has just done a Shradha of Hundreds of Thousands of investors’ hard earned money. Even Didi Mamata has been found herself in hot waters upon this Chit Fund collapsing like a bolt from the blue.

Assam has been a fertile ground for the operators of such funds to prey on for a very long time. Given the well founded characteristics of majority of the Assamese being simpleton and can be easily deceived, I feel like asking my fellow Assamese victims, “Do you not have taste buds that you are being fed with sour mangoes time after time?” Actually it is GREED that the investors in these schemes are drawn into and get a nasty shock afterwards.

The GREED is to earn a fabulous return from the investments the punters put in. That is their downfall.


These are all money making schemes. Most of these schemes are run by fraudsters and have been in practice across the world.

The CHITs are indigenous to India. It is defined as, “A Chit fund company means a company managing, conducting or supervising, as foremen, agent or in any other capacity, chits as defined in Section 2 of the Chit Funds Act, 1982. According to Section 2(b) of the Chit Fund Act, 1982, “Chit means a transaction whether called chit, chit fund, chitty,committee, kuri or by any other name by or under which a person enters into an agreement with a specified of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical installments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount”.

The Prize amount in the act makes it abundantly clear that is some kind of lottery. The intention in drawing the above Act may have been good, so as to, help small subscribing investors to be able to have a large enough capital to start some worthwhile enterprise for his upliftment. However, the reality is that, the Act is lax enough for fraudsters to prey on these naïve investors and the fraudsters end up being fabulously rich. It is more than likely the higher echelons of Indian political scenario are beneficiaries of these scams directly or indirectly. India in breaking free from the Nehruvian socialism in a corruption ridden country created this Bird which lays golden eggs. Is it an Indian bird? Unlikely.

Scams like the Chit funds were known to Charles Dickens. The infamous Pyramid Schemes are repackaged time and time, the early recruits become the enthusiastic sales person, as they benefit massively in the scam’s early days until a single brick; in the Pyramid disappears making the whole thing crashing down leaving the later recruits losing all their investments. The mangers of the Pyramid loose nothing as they hardly invest anything apart from their cunningness and keeps all the money to themselves once the Pyramid collapses.

The most famous Pyramid Scam is the Ponzi Scheme used by Charles Ponzi in 1920’s who preyed on investors in the USA & Canada. The Scam can be perpetrated in several Avatars, but, all have a short lifespan and collapse is inevitable and the scammer/scammers vanishing with the ill gotten gains is the outcome in all.

So, readers the moral is in any investment the investors can expect return of a proportion of the profit made by the investment of the Capital. No one pays more than the return available at a point in time. If anyone promises to do so, it has the sink of a scam in progress and steer clear of it.

If you want to make money, do hard work and be an entrepreneur investing your money in proven indigenous cottage industries or starting your own. There are many I can assure you. Shaking off your apathy should let you put your thinking cap on and you will no longer the loser to scams and earn good money.

Good Luck!

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Chit Funds or Cheating Schemes?

By: Times of Assam Bureau Read time: 12 min