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TITLE OF THE PROJECT: Investor Awareness & preferences towards chit funds
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with reference to Neeladri Chits Hyderabad.

NAME OF THE ORGANISATION: Neeladri chit funds private limited
NAME OF THE STUDENT: T. Gayatri
REGD NO: 10021
MOBILE NO: 9059305746
MAIL ID: gayatri.orange@gmail.com
COMPANY SUPERVISOR NAME: G. Venu gopal reddy
PROJECT WORK OFFICE ADDRESS: 1-2-597/2, Baraf Bagh colony,
Domalguda, Hyderabad-500029.

8. MAIL ID OF THE SUPERVISOR: neeladrichit@gmail.com

9. MOBILE NO. OF THE SUPERVISOR: 040-23264646
10. OBJECTIVES:
To find out the reasons for investing in Neeladri chit funds private limited.
To find out the level of customers satisfaction with services of Neeladri chit
fund private limited.
To find out the source of influencing in investing in Neeladri chit fund private
limited.
To know awareness of customers related to chit funds.

11. WHETHER THE OBJECTIVES AND TITLE OF THE PROJECT WORK IS

APPROVED BY THE COMPANY SUPERVISOR: Yes

Industry profile
Chits provide a good source of finance for different type of people Viz.., small investors,
businessmen, small scale industrialists etc. chits are a good means of savings for any
contingency requiring substantial amount. It serves all persons whether they desire for
savings or borrowing to meet extraordinary expenses on special occasions like marriages,
construction of houses etc.,
Adequate care is necessary to choose a suitable group. The selection of a particular group
largely depends on the subscribers capacity to provide surplus funds month after month from

his normal income for the subscriber as well as the companys point of view to avoid any
embarrassment at the time of releasing the prize money or in releasing chit installments
month after month.

Chit
It is a contract between the foreman, as the promoter is called, and the subscribers, who
join voluntarily. It is a financial system under which the periodical and regular savings of a
group of subscribers are made available to each subscriber, a specified amount every month
(installment) for a specified period.
The pooled funds every month are offered to the subscribers at monthly auctions and the
subscribers who bids for the highest discount is declared the prize winner and given the prize
amount a proper security. A prized subscriber also should continue to pay the subscriptions
till the termination of the chit. The amount foregone as discount, less foremans commission
is distributing among the subscribers as dividend.

Chit group
A chit group refers to a specified number of members agreeing to subscribe a specified
amount for a specified period. For example, 40 members, 40 months, Rs.500/- a month. The
number of members and the number of months to be same.

Foeman
Any person under the act responsible for the conduct of the chit and includes any person,
such as branch manager, discharging his functions.

Validity of the contract of the subscribers with the foreman for an

identification period
The contract of the subscribers with the foreman is valid only for the duration of a chit
group and until the liabilities of subscribers to foreman or vice versa are discharged or paid in
full.
Benefits of chit subscribers
a) To save in small amounts to receive a lump sum during the period of chit.
b) To borrow the future savings in advance. Some subscribers join chit funds to borrow
and others to save.

Chit agreement
The chit agreement is a contract between the foreman and the individual subscribers to a
chit group. It is a set bye-laws or regulations dealing with procedure for the conduct of chits.
It will be signed in duplicate, duly witnessed. The chit agreements shall contain the name and
address of the subscriber, the number of installments and the installment amount payable, the
interest/penalty for delayed payment, the probable date of commencement of chit and its
duration, the manner of deciding the prize winner at each installement, the maximum
discount to be foregone at each installment, the mode and proportion of dividend and

foremans commission, the date, time and place of auction, the installement at which the
foreman is to get the chit amount, the name of the bank, the security to be furnished by prized
subscriber etc., though each subscriber sign a declaration in the application from that he has
read and understood the terms and conditions of the chit agreement, the declaration of all the
subscribers are detached from the application form, pasted in a piece of paper and filed with
the registrar.

Process of enrolling subscribers for a group

The subscribes have to fill in an application form furnishing particulars of their names,
residential and office addresses, approximate gross monthly salary, names of nominees and
their relationship to them. They also have to sign the declaration that they have read and
understood the terms & conditions of the chit agreement.

Company profile
Neeladri Chit Fund Private Limited has exhibited expertise in the financial area and
solid operational excellence ever-since 1988 its incorporation. Neeladri provides good source
of finance not only savings to House holders, Employees, Business people and also different
types of people Viz., small investors, businessmen, Women Entrepreneurs small scale
industrialists etc. It also provides a means of savings for contingencies.

A chit is, therefore a good Low, Medium, High Class persons desirous of saving as well as
people who like to borrow / Investment to meet expenses on special occasions like marriages
construction of house etc.., and funds for business or industrylike any other needs. A
person can choose a suitable chit group depending on his capacity to provide extra funds,
month after month. The potential to pay regularly is the important criteria to choose a suitable
chit group.

Products and services

Chit fund services

Lorries services
Fund services
Mutual fund services

NCFPL Objects
This chit is aimed to encourage saving habit among members and help them to meet their
financial needs on the principles of cooperation, good faith and trusteeship among the
members and the company as the foreman, who conducts auction or drawing chits.

NCFPL Enrolment
Members who intending to become subscribers shall be enrolled on receipt of application
in prescribed form mentioning the group number and details of the chit along with the 1st
installement. The foreman reserve the right to refuse admission to any applicant without
assigning any reason what so ever. On admission, every subscriber shall be given an
enrolment number and a chit pass book with all details. In case of loss/torn of pass-book, a
duplicate pass book will be issued against a payment of Rs. 100/-

Mode of payments
The Forman/company shall not responsible for any payment made to an un-authorised
person. Subscriber shall pay the instalments wide account payee cheques/pay-orders/DDS. In
case of cash payment it is the responsibility of the subscriber to get a proper receipt for the
same. Outstation cheques are not accepted. A sum of Rs. 200/- will be charged as bank
charges in case of return of cheques by the bankers (dishonour of cheques).

NCFPL advantages

100% transparency for all the chit transactions

All our chits registered as per chit fund act, 1982
Amazing service to our esteemed customers.

Why with us
This chit scheme is aimed to encourage saving habit among members.

 Members who intending to become subscribers shall be enrolled on receipt of

application.
Auction shall start with a discount of 2.5%. Chit auctions for all groups are
conducted.
For the convenient of the subscribers collection for the chit monthly subscription can
be made at their door steps.
Chit amount will be paid to a successful bidder.

Who we are
Neeladri chit fund private limited has exhibited expertise in the financial area and solid
operational excellence ever-since 1988 its incorporation. Neeladri provides good source of
finance not only savings to house holders, employees, business people and also different
types of people Viz., small investors, businessmen, women entrepreneurs small scale
industrialists etc. It also provides a means of savings for contingencies.

Payment options
1. Quick pay by NEFT/RTGS fund transfer:
On receipt of intimation card you can do a fund transfer to our bank A/C by logging
into your own banks online banking system and transfer money by using the
NEFT/RTGS option there.
2. Collection Agent
3. Payment at Branch
4. Debit and Credit Card (coming soon).

Literature review
V. Krishnan mentioned the growth, importance, types, features and malpractices of chit
funds. The favouring circumstances that fostered the growth of the chit funds were the lack of
organized credit facilities to permit of savings deposits, the accommodation of small capital
and the availability of loans on easy terms. The dominant feature of the transaction
The chit funds show a great deal of adaptability to the conditions that prevail in the area
in which they have to operate. The indebted landlord, the needy trader, the improvident
weavers and other artisans, the hard working daily labourers and factory workers and the
helpless vegetable vendors all derive benefit from the transaction. There are importantly

three types of chits, (1) The Thattu chit, (2) The Auction chit, (3) The Prize or the lottery chit.
It is inevitable that there are a variety of malpractices in the system. If such malpractices are
only lapses that are bound to exist in any institution then efforts should be taken to bring the
working of such institution under rigid control to reduce malpractices to the minimum.
Srinivas and Higuchi Observed that Chit funds have been grouped under the category
Mutual Credit Suppliers, because the demand and supply of credit is mutual-that there is a
give and take process involved. Participants typically support each other for credit needs in
mutuality. The money supplied or saved by some participants is lent and borrowed by some
other participants. Thus the benefits of the operation are mutual to all participants and equally
distributed. The central idea of mutual credit suppliers is that they encourage savings from the
participants.
According to the information given by The Banking Commission nine banks in Andhra
Pradesh, Kerala, Mysore and Tamil Nadu were conducting chit funds in 1968.
Dr. C.P.S. Nayar had tried to place the role of Chit Funds in the proper financial
perspective. The study emphasized the need to regulate the activities of Chit Funds, and at the
same time, perceived their role as active mobilisers of savings of the community and as a
useful complement to other financial institutions. The work was an attempt to study all the
known types of chit funds, classifying, naming and defining them wherever necessary. The
study also attempted to examine the economic aspects of chit funds on an empirical and
analytical basis. The analysis covered all the patterns of business of chit funds working
throughout the country.
The Author also pointed out that the basic principle underlying a chitty is accumulation
of savings. The unique feature of savings in a chitty as against the savings in other types of
financial institutions such as commercial bank, the post office savings bank, etc. is that there
is a sort of compulsion in effective savings. While examining the history of chit funds, Nayar
has also discussed different stages of their evolution. Stated that the original home of chit
funds is South India, in the last three decades there has taken place a growth of chit funds in
several parts of India. He has mentioned the growth of chit funds in the Union Territory of
Delhi and in the state of Maharashtra. He estimated the annual turnover of business of 125
chit companies at .217 lakh, in Maharashtra and in Delhi, 109 registered companies with
annual turnover of .6 Crore, by the end of 1968-69.
The study of Dr. C.P.S Nayar, highlighted that the chit funds is different from others
Savings and credit institutions in that it is more than a savings bank to the saver and more
than a lender to the borrower. The chitty offers many facilities to the borrowers. (1) The loans
in most cases are unconditional. (2) They are clean loans. Tangible assets are rarely used as
security. (3) They can be rapid in easy installments. (4) The borrower need not keep a margin
for the loan. The increasing popularity of chit funds even in those areas where the banking
habit of the people is wide spread shows that the scheme is basically sound and cannot be
brushed aside as an irrelevant or anachronistic business practice. It becomes easy when the
chit funds are operated by disciplined institutions such as the commercial bank, a
Government owned company or a public limited company.
Shri K.M. Balavenkataramana studied about progenitor Moyy Murai. Moyy means call
money pooled and Murai means custom. It was a sahaya-nidhi, with a strong element of cooperative spirit. The principle of chit fund was known to rural India for a fairly long time.

For years, women in villages had formed the habit of saving a handful of rice or other grains
for a rainy day, and this became very useful to face unexpected guests and unforeseen
expenditure. A chit fund is a financial arrangement or institution based on mutual trust and
confidence. A chit fund is primarily a mutual benefit society in which some people join to
save and others to borrow. A financial intermediary gathers the savings of the people and
distributes the funds to numerous borrowers, thus affecting the allocation of real resources.
The difference of a financial intermediary and a chit fund is, chit fund collects the savings of
the members by periodical subscriptions for a definite period of time, and it connects the
borrowing class directly with the lending class and the pooled saving is lent out to the same
group of savers.
In so far as the chit funds have no control over the end-use of the funds, the
intermediation does not necessarily result in an efficient use of resources. The efficient use of
resources takes place only in the case of those members who utilize the prize amount in
acquiring income-earning assets, which directly or indirectly promote capital formation. It is
therefore; better to consider chit funds as a co-operative endeavour.
G. jagadisan indicated that, some measures of regulation of chit funds. Chit funds like
any other non-banking financial institution are treated as Para-banking institution. It has been
recognized that chit funds arose at a time when banking facilities had not developed and thus
they filled an important credit gap in the economy. Another important aspect is that many
companies are coming to rely upon chit funds as a source of finance. The fact that the
strength to a chit fund company is the foreman and his reputation for promptness, straight
forwardness and honesty. It is very essential that the number of chit companies in each state
is reduced over a period of time so that supervision and control become effective. Every chit
company should obtain a license before commencing its business. And also the company
should be issued the license only if it furnishes the bank guarantee. Government should use
the banks as agents to supervise the working of chit funds.
Besides it will make the Reserve Bank to exercise some control over chit funds.
S. Narayanaswamy addressed that chit fund was attractive in so far as it proved a readymoney bank for the subscriber, what time it was equally attractive for the enterprising
foreman, who got the feel of the subscribers monthly contribution on which he paid no
interest, though he was free to earn it himself by sagacious and shrewd investment. The five
per cent commission is the wage for his organizing the outfit. Chit fund was born and has
stayed to serve the needs of a closely knit community of people living very near each other
often in the same village, each of whom was keenly conscious of the rainy day that might call
abruptly for a large sum of money. Communications were tenuous or did not exist. Perhaps,
the close proximity of all subscribers made for smooth and successful conduct of the chit
operations.
Mohandas attempted to evaluate the Central Chit Funds Act 1982 as a regulatory measure
for chit business. And also deal with the features of Chit finance, conceptual issues involved
in chit fund regulation and also with the economic implications of the major provisions of the
Act. The study suggested a graduated ceiling on discount ranging from thirty to fifty per cent
for chits of different durations. To eliminate unnecessary competitive bidding, the study
recommended restriction on open bidding up to twenty five or thirty per cent of the chit
amount and allow further bidding up to fifty or sixty per cent only on the production of cash

deposits above the initial limit. The study also analysed the economic gain to the saver and
cost of borrowing in terms of effective annual interest yield and effective annual interest cost.
Itoop M.L has identified the factors leading to the growth of Chit Funds in Kerala
especially in the 1980s. He also examined its utility as a saving instrument and supplier of
easy credit and thus employment potential. The findings of the research revealed that quries
help industry, agriculture and even house construction. The only unproductive expenditure
related to the money spent on marriages and on durable consumer goods. The study also
found that the cost of credit is cheaper compared to the cost of credit with reference to the
commercial banks other financial institutions.
Joseph M A evaluated various savings / investment schemes available in comparison to
the chit schemes. It showed that chit schemes can be treated as the best investment alternative
available. The rate of return on chit was calculated by dividing the annual dividend by the
annual net subscription. The study showed that the rate of return calculated for a chit was
much more than the rate of return applicable to the various investment alternatives. It also
presented the various characteristics of chit schemes and concluded that unauthorized chit
business was in the ruins due to hard and stringent provisions of the enactments and KSFE
was far away from the reach of the common people.
S. Radhakrishnan argued that Chit Funds and Nidhis have not received the attention they
deserved in the scheme of reforms. The paper included certain measures of reforms to enable
Chit Funds to grow on sound and healthy lines, including the introduction of credit rating for
all incorporated Chit Fund companies.
Indira Raja Raman tried to explain Rotating Savings and Credit Associations and their
similarities with Chit Funds in India. The article showed that these associations are functional
in various parts of the world including highly developed countries. Random ROSCAs are
similar to Prize chits in India, while bidding ROSCAs are similar to our Auction chits.
Rajendran attempted to provide a brief resume of the evolution of credit in Kerala, the
different practices and the institutions concerned, since the beginning of the 19th century. The
role of chitties in terms of their number, extent and volume of operation up to 1936 has been
included in the study. The study pointed out that the vital links between the preinstitutional
and the institutional phases were provided by Chit Funds which gradually emerged into
banking institutions.

Namrata Acharya mentioned that chit funds are looking down in terms of number and
are growing in terms of value. The registered chit funds find it less lucrative to fund the poor
due to the rising operating costs. According to AIACF, running chit funds is no longer viable.
Though the money circulated has increased, the number is going down. It may come down
further in the years to come. On the other hand, unregistered chit funds have found a utility in
evading tax and access to large deposits. The clout of unregistered chit funds is tremendous.
The number of unregistered companies is almost 100 times than the registered companies.
Prof. Mudit Kapoor opined strongly that the chit funds are an important source of finance
for small businesses and low-income households in India. Registered chit funds are away
from low value chit schemes due to increased operational costs and strict rules imposed by
Government. Chit funds are very safe mode of financing and saving. They offer loans at

lower interest rates than money lenders and sometimes than banks also. The size of the
unregistered chit funds is stated about 67 times of the registered industry in Delhi and 3.2
times in Chennai. On an average 50% of chit fund clients are poor households and most of
them save for particular target events like marriage, education etc., and also they value the
flexible provision of credit. Customers feel comfortable with the bidding process and 96% of
them perceiving registered chit industry as safe or very safe. Most funds have moved away
from smaller chit schemes due to strict regulatory norms imposed by the Government and
increasing wealth levels in India.
Preethi Rao suggested that chit funds are good financial sources to small businesses,
which has been suffered from the money lenders with their high cost of loans and banks with
their stringent procedures. They can save the money with chit funds and when in any
emergency need of capital they can take loan out of the money saved. The Author has
mentioned the reasons of failures of chit funds, like the regulatory hurdles due to the stringent
rules proposed by the Government and the increased costs of operations for the registered
companies are the setbacks of the industry. Because of these reasons, the registered
companies are shifting their operations to unregistered companies.

NEED FOR THE PROJECT WORK

Chit is a traditional method of financing. This study which gives a broad idea about
customers in chits. At present scenario customers are not satisfied in the chits because due to
rapid growth bogus chit funds to know the satisfaction level of the customers in SHRIRAM
CHITS, I preferred to do this study.
SCOPE OF THE PROJECT WORK
This study help us to know about the chit fund and their procedure.
This study help us to know about the awareness and preferences of investors.
Through this study to know about the investors investing in the company.

 To assess the level of satisfaction with Neeladri chit funds and so that corrective
action can be taken needed.
RESEARCH METHODOLOGY
MEANING OF RESEARCH:
M. STEPHENSON in the encyclopedia of social science define research as the
manipulation of things, concepts or symbols for the purpose of generalizing to extend,
correct or verify knowledge, whether that knowledge aids in construction of theory or
in the practice of an art
Websters New International Dictionary defined research as, careful or critical
inquiry or examination in seeking facts or principles: diligent investigation in order to
ascertain something.
TYPE OF RESEARCH:
DESCRIPTIVE RESEARCH
In this survey, descriptive research is using which is most appropriate. This research
enables a researcher to explore new areas of investigation; normally empirical
problems are investigated adopting this approach. A researcher develops his
hypothesis based on his knowledge about the subject matter to study.
RESEARCH INSTRUMENT
Questionnaire is the research instrument used in the survey. In this method, a preprinted list of questions arranged in sequence is using to elicit response from the
informants. The questionnaire is mailed to respondents who are expected to read and
understand the questions and write down the reply in the space meant for the purpose in
the questionnaire itself.
QUESTIONNAIRE DESIGN:
The questionnaire is of structured type which consists of close-ended,
open-ended, multiple choice and dichotomous questions to suit the study.
DATA COLLECTION
Data could be broadly classified as follows:

Primary Data
Secondary Data
Primary Data:
It is known as the data collected for the first time through field survey. Such data
are collected with specific set of objectives to assess the current status of any variable
studied. Primary data always reveal the cross section picture of anything studied. This is
needed in research to study the effect or impact of any policy.
Secondary Data:
This refers to the information or facts already collected. Such data are collected
with the objective of understanding the past status of any variable. The data collected and
reported by some source is accessed and used for the objective of the study. In this survey,
secondary data is used.

Source of data:
Primary data:
It was collected from different people by using questionnaire
Secondary data:
It was collected from Magazines, Internet, company brochures.

Research Instrument
Questionnaires were developed to carry out the survey. Different types of questioning
methods like Open-ended, Multiple choice and Ranking questions were employed.

Questionnaire design
The questionnaire designed is structured questionnaire consisting of close ended,
multiple choices, dichotomous, ranking and open-ended questions to appropriateness.

DATE AND TIME WHEN CONTACTED LAST WITH THE COMPANY

SUPERVISOR BEFORE SUBMITTING THIS 2ND PHASE PROGRESS REPORT:
26-05-2015