It is a unique financial product, which blends the advantages of both investment and advance. It is a risk free safe haven for the public as KSFE conducts only chitties fully governed by the provisions of Central Chit Fund Act 1982. The installment per month for chitties range from Rs. 1,000 to Rs. 5,00,000 and the usual duration of chitties are 30 months, 40 months, 50 months, 60 months and 100 months.
The total of the periodic subscription, called the chitty amount, will be given out as “prize money” to the person who bids by allowing for the maximum reduction in the prize money. The maximum reduction possible is 25% as per the prevailing Chitty Act and if there are more than one subscriber interested in bidding at 25% reduction, the numbers of the such bidders will be put to a draw.
Thus each subscriber gets an opportunity to receive the prize money once during the tenure of the chitty. All the promoters have to contribute the periodic subscription till the end of the chitty.
Various schemes of KSFE that offers financial assistance such as loans or advances can only be availed against the security provided by the customer. Security is defined as, “anything, such as salary recovery undertaking, landed property, deposit receipt etc., that is deposited or pledged as a guarantee for the fulfillment of an undertaking regarding the repayment of an advance, along with interest thereon, to be forfeited in case of default”