Chit Chat on Chit funds in Kerala

Chit Chat on Chit funds in Kerala

Peruse to know more on how to register a chit company and how it works….

Chit registration in Kerala refers to the process of registering a chit fund, which is a financial scheme where a group of individuals contribute a fixed amount of money regularly, and the total amount is then awarded to one member through an auction or a lottery system. Chit funds in Kerala are governed by the Kerala Chitties Act, 1975. The Act outlines the rules and regulations related to chit funds, including registration, conduct of chit funds, rights and responsibilities of the parties involved, and penalties for non-compliance.


To register a chit fund in Kerala, the organizer (chit fund company) needs to apply for registration with the Registrar of Chits, who is usually a designated officer in the District Registrar’s office. The application should include details such as the name and address of the chit fund company, the nature of the business, and the proposed chit schemes.


The chit fund company must meet certain criteria to be eligible for registration, such as having a minimum net worth, maintaining a specified capital adequacy ratio, and fulfilling other financial and infrastructural requirements.

  • The chit fund should be a registered legal entity, such as a company or a cooperative society, as per the applicable laws and regulations.
  • The chit fund should have a minimum net worth as prescribed by the Kerala Chitties Act, 1975. The specific net worth requirement may vary based on the size and type of the chit fund.
  • The chit fund should maintain a specified capital adequacy ratio, which is the ratio of its owned funds to the total chit amount. The capital adequacy ratio requirement ensures that the chit fund has sufficient funds to meet its obligations to the subscribers.
  • The chit fund should have adequate infrastructure, including office space, facilities, and technology systems to conduct its operations efficiently. 
  • The chit fund should have qualified and experienced personnel to manage its operations effectively. This may include directors, managers, and other key personnel who are well-versed in chit fund operations and compliance. 
  • The chit fund should comply with all the relevant provisions of the Kerala Chitties Act, 1975, and any other applicable laws and regulations. This includes maintaining proper books of accounts, conducting periodic audits, filing reports, and fulfilling statutory requirements.
  • The registration application for a chit fund in Kerala typically requires submission of various documents, which may include:
  • Memorandum and Articles of Association or the cooperative society bylaws
  • Proof of legal entity registration, means registration certificate
  • Audited financial statements of the chit fund entity
  • Information about the directors and key personnel
  • Address proof of the registered office
  • Any other documents as specified by the Registrar of Chits or relevant authorities.

Registration Fee & Renewals

The chit fund company is required to pay the prescribed fees for registration, and the registration is valid for a specific period. The registration needs to be renewed within the stipulated time to ensure continued compliance with the regulations. There is typically a registration fee associated with registering a chit fund in Kerala. The fee amount may vary based on the size and type of the chit fund.

Registration Fee is payable at the time of initial registration of the chit fund. The amount is based on the chit fund’s total value or the maximum amount of the chit fund, as specified by the government. It is usually a percentage of the chit fund value or a fixed amount.

Chit fund registrations in Kerala are typically valid for a specified period, after which they need to be renewed. The renewal fee is payable to extend the registration for an additional period. The renewal fee structure may be similar to the initial registration fee, based on the chit fund value or a fixed amount.


Here are some points to consider when running a chit company:

  • Ensure strict adherence to the relevant laws, regulations, and guidelines governing chit funds in your jurisdiction. Stay updated on any changes or amendments to the laws and comply with reporting requirements, registration processes, and other legal obligations.
  • Implement effective risk management practices to mitigate potential risks associated with chit fund operations. This includes assessing and managing credit risk, liquidity risk, operational risk, and regulatory compliance risk. Develop comprehensive risk management policies and procedures tailored to your chit company’s operations.
  • Maintain transparent communication with chit subscribers by providing clear and accurate information about chit schemes, terms, conditions, and potential risks. Ensure subscribers have a thorough understanding of their rights and obligations. Timely and effective communication fosters trust and helps build long-term relationships.
  • Implement efficient operational processes to streamline chit fund operations. Leverage technology solutions to automate administrative tasks, manage financial transactions, track subscriptions, and facilitate transparent auctions and dividend distributions. This improves operational efficiency, reduces errors, and enhances customer experience.
  • Exercise prudent financial management practices to ensure the financial stability and sustainability of the chit company. Maintain adequate capital, manage cash flows effectively, and invest funds prudently to maximize returns without compromising safety. Engage the services of experienced financial professionals or consultants to assist with financial planning and investment decisions.
  • Establish strong internal control mechanisms to safeguard chit fund assets, prevent fraud, and ensure accurate financial reporting. Implement segregation of duties, regular audits, and internal control reviews. Regularly monitor and reconcile financial transactions and maintain proper documentation.
  • Prioritize customer service and satisfaction by providing prompt and courteous assistance to chit subscribers. Address their queries, concerns, and grievances in a timely manner. Focus on building long-term relationships and maintaining a positive reputation within the chit fund industry.
  • Stay updated with industry trends, regulatory changes, and best practices by participating in relevant seminars, workshops, and training programs. Continuously educate yourself and your staff to enhance knowledge and skills in chit fund management, customer service, risk management, and compliance.

FAQ (Frequently Asked Questions)

  1. What is a chit fund?

A chit fund is a type of financial arrangement where a group of individuals, called subscribers, come together and contribute a certain amount of money periodically. The total amount collected is then disbursed to one or more subscribers through an auction process. Chit funds are regulated by specific laws in Kerala, such as the Kerala Chitties Act, 1975.

  1. What is the registration process for a chit fund in Kerala?

To register a chit fund in Kerala, you need to submit an application to the Registrar of Chits or the concerned authority. The application should include the necessary documents, such as the Memorandum and Articles of Association, address proof, financial statements, and information about directors and key personnel. The registration process may involve scrutiny, verification, and payment of the applicable fees.

  1. What are the eligibility criteria for chit fund registration in Kerala?

The eligibility criteria for chit fund registration in Kerala may vary based on the size and type of the chit fund. Generally, you need to meet the minimum net worth requirement as prescribed by the Kerala Chitties Act, 1975. You should also have the necessary infrastructure, qualified personnel, and comply with the relevant regulations.

  1. What are the fees involved in chit fund registration in Kerala?

The fees for chit fund registration in Kerala are determined by the government authorities and may vary based on the size and nature of the chit fund. The fees typically include registration fees payable at the time of initial registration and renewal fees to extend the registration periodically. There may be additional charges for obtaining certificates, documents, or compliance-related services.

  1. What are the compliance requirements for a registered chit fund in Kerala?

A registered chit fund in Kerala must comply with various legal and regulatory requirements. This includes maintaining proper books of accounts, conducting regular audits, filing reports and returns, providing necessary information to subscribers, and adhering to the provisions of the Kerala Chitties Act, 1975.