Chit Fund Calculator – Real Interest Rate & Returns

How to use the Chit Fund Calculator

1. Enter the chit value and its duration in months (equal to members).
2. Enter the foreman's commission percentage.
3. Enter the month you plan to take the prize and the discount you bid.
4. Enter an expected average bid for other months, then press Calculate.

How a chit fund works

A chit fund is a group savings and borrowing scheme. Every member pays a monthly instalment. Each month the pot is auctioned, and the member willing to accept the largest discount (bid) takes the prize. The discount, minus the foreman's commission, is shared among all members as a dividend, which reduces everyone's instalment.

Calculations used

• Commission = chit value × commission %.
• Dividend per member = (winning bid − commission) ÷ members.
• Instalment = chit value ÷ months − dividend.
• Prize received = chit value − your winning bid.

Real interest rate (IRR)

The calculator builds the month-by-month cash flow – instalments going out and the prize coming in – and finds the internal rate of return. If you take the prize early with a high bid, you pay more in total than you receive, and the rate shown is your effective cost of borrowing. If you wait till later months, you usually receive more than you paid, and the rate is your effective return, like a recurring deposit.

Before joining a chit

• Join only chits registered under the Chit Funds Act, 1982 with the state Registrar of Chits.
• Compare the effective borrowing rate with a bank personal loan.
• Read the agreement for penalties on late instalments.

Frequently asked questions

Last updated: 10 November 2026