Chitra Chit Fund Company, established in 2015, operates in a small town in India, providing a platform for local residents to save and borrow money through a traditional chit fund system. With a growing customer base, th

Following are the restrictions imposed by RBI on chit fund business: Chit fund business can be conducted only by a (to be awarded registered company. Running of Chit business by family on overall and partnership firms are restricted. Chit companies must register with the Registrar of Chit Company in every state, furnishing full particulars about their chit company. The maximum discount that could be taken in a bid was restricted to 30% of the total chit amount. However, in 2001, the same has been enhanced to 40% (in the case of a chit for ₹ 1 lakh, not more than ₹ 40,000/- can be the bid amount). Details of each and every chit must be furnished to the Reserve Bank of India along with the personal particulars of the subscribers. It is mandatory to keep one month's chit amount of all the subscribers/members with the Reserve Bank of India till the end of a particular chit. The aforesaid restrictions have been imposed by the RBI on chit fund businesses like Chitra Chit Fund Company.