Chit, Defaulting Subscriber, Approved Bank, Discount

A starts a chit with 200 subscribers each of whom pays a monthly
installment of Rs. 10 for 124 instalments. One prize is drawn every month upto
the fortieth instalment and thereafter two prizes every month until all the sub-
scribers get their Out of total monthly collection of Rs. 2,000, Rs. 200 is
set apart for discount and the prize winner is paid Rs. 1,000. The foreman is
allowed the use of the balance of Rs. 800 until the same is required for pay-
ment to the prize winners. The transaction is not a chit.
(b) There are 100 subscribers to a chit and the subscription by each of
them is Rs. 10. All the subscribers get by turns Rs. 1,000, being the whole of
the chit amount and are liable to pay future subscriptions. The transaction is
also not a chit.
(3) “chit agreement” means a document containing the articles of
agreement between the foreman and the subscribers relating to the chit and
filed under Section 6;
(4) “chit amount” means the sum total of the subscription payable by
all the subscribers for any installment of a chit without any deduction for
discount or otherwise;
(5) “defaulting subscriber” means a subscriber who have defaulted in
the payment of subscriptions due according to the terms of the chit
(6) “discount” means the sum of money or the quantity of grain or
other commodity, which a prized subscriber has under the terms of the
chit agreement to forego and which is set apart under the said agreement
to meet the expenses of running the chit or for distribution among the
subscribers or both

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