Chit fund or chits are originated 1000 years way back in India. It is a mechanism that combines borrowing and savings in a single scheme.
Chits are initially started with in the known members of same communities. Later they have spread to the office colleagues, neighbors, friends and known persons to
the chit administrator. This means chits are confined to a local area only. Due to the limited number of chits & small chit groups every member is known to the chit
administrators and, if any chit member who do not pay the amount (the defaulter) after borrowing (or) withdrawing the money his name is immediately spread to all
the chit members and chit administrators. Therefore the default member is not considered to join in the forthcoming new chits