Bookkeeping for a chit fund or committee: what to record, and when

The pot goes out on 14 March. It gets written into the book on 2 April. In those nineteen days three members pay in cash, one pays half, somebody sends ₹5,000 by UPI with no message, and the organiser's memory fills the gaps. That is where committee arguments usually start.

Eight things should be on paper before the cash leaves the room:

• the date
• the chit value
• the winning bid
• the runner-up bid
• who won it
• the amount actually handed over
• the commission you took
• the names of everyone who was paid up at that moment

The last one matters more than it looks. Six months later a member claims he was clear in March and was wrongly barred from bidding. A list written on 14 March answers him. A reconstruction written on 2 April does not. If your committee allots by lot rather than by bid, that same list decides whose name goes into the draw.

The runner-up bid is there for a related reason. Auction disputes are usually about the bidding, and "he bid ₹14,000 and I bid ₹15,000" can only be settled by two numbers written in front of everybody on the day.

A single line reading "₹1,00,000 collected, March" tells you nothing you need. The moment one member is short the total is wrong, and you cannot find out which member without asking all twenty. Write each subscription as its own entry: the member's name, ₹5,000, and the date the money actually arrived. Twenty lines a month is the difference between knowing on the 6th that Rameshbhai is short and finding out on auction day.

Keep the fund's book out of the shop's book. ₹1,00,000 of subscriptions landing in the shop's cash book in March makes March look like the best month you have ever had, and the ₹90,000 that goes out again on the 14th looks like an expense you cannot name. One notebook, or one group, for the fund alone.

Not everyone in a committee will use a phone, and they do not have to. Members who log in see the same running balance you do; for the two uncles who want nothing to do with apps, whoever has permission to post on another member's behalf enters their ₹5,000 under their own names, so the fund's total stays whole. In Khatamel that permission is granted per member, which is also how you stop a collector from quietly recording somebody else's payment. Either way the discipline is one entry per person per month, dated when the cash or the UPI actually landed.

Take a 20-member fund at ₹5,000 a month. The chit value is ₹1,00,000 and it runs twenty months. In month one the highest bid is a ₹15,000 discount, so the winner takes ₹85,000. Commission at 5 per cent of the chit value, which is the ceiling for a registered chit and what most committees copy, is ₹5,000. That leaves ₹10,000, which is ₹500 a member, so month two's subscription is ₹4,500.

That is one convention: the full ₹5,000 collected before the auction, the dividend adjusted into the next month. The commoner alternative nets it off the same month, so everybody pays ₹4,500 for month one and nothing is carried at all. Write down which one your committee follows, on the first page, because the two produce different books. And if your arrangement pays the organiser by handing him the first month's pot instead of a percentage, that pot is still an entry with your name on it.

Month one collects ₹1,00,000 and pays out ₹90,000. The ₹10,000 left over is next month's dividend and it sits with you for four weeks. Do not invent an entry for it, because nothing moved. ₹1,00,000 in and ₹90,000 out already leaves it standing in the running balance. What it needs is a stated reason, so put it on the auction entry's note: "₹10,000 held, dividend ₹500 × 20, month 2". Unrecorded, it is ₹10,000 in the organiser's hands that the book cannot account for, which is the one shape members read as helping yourself. A month later, when collections are ₹90,000 against a ₹1,00,000 pot, that same ₹10,000 is what makes up the difference.

Write your commission as an entry on the auction date. ₹5,000 out, named as commission. Do not net it off the payout in your head, and do not settle it as a round figure at the end of the year. The one figure in a chit fund that members eventually ask about is the organiser's cut, and twenty dated entries they can count themselves is the only good answer. A commission you never recorded looks exactly like a commission you hid.

When the subscription drops to ₹4,500, do not let the ₹500 disappear into the smaller number. Either write two entries, ₹5,000 received and ₹500 paid out as dividend, which nets to the ₹4,500 actually in your hand, or write the ₹4,500 with a note saying "₹5,000 less ₹500 dividend, month 1 auction". The first is cleaner and the second is faster. A bare ₹4,500 with nothing beside it is what nobody can explain in four years.

A member pays ₹3,000 of his ₹5,000 on the 5th and promises the rest on the 10th. It arrives on the 19th. If that ₹2,000 is dated the 10th, the month looks collected while ₹2,000 of it is still in his pocket, and you will fund the payout out of your own money without noticing you did.

This is what a pending entry is for. Mark the promise, so the name and the amount are both on record, and keep it out of the running total until the money is in hand. In Khatamel a pending entry is listed and never counted in any total, which is the behaviour you want: you can see that Rameshbhai still owes ₹2,000 for March without March pretending to be complete. On paper the same thing works with a separate column for promised amounts, under one rule — the running total only ever adds what has arrived.

Part payments get one entry each. ₹3,000 on the 5th and ₹2,000 on the 19th are two entries; one ₹5,000 dated the 5th hides both facts. If your fund charges anything for lateness, the dates are the calculation. If it does not, the dates still answer "was he clear before the auction?", and that question comes up whenever somebody is unhappy with an auction.

Around Diwali this breaks down. If five of twenty pay late and three of those pay in parts, that is eight entries you are carrying in your head through the busiest fortnight of your own shop's year. Write them the same evening.

Two years after the last auction, a member says he never received his pot in month seven. Nobody remembers the evening. Everybody agrees the amount: the discount that month was ₹9,000, so ₹91,000 went out. What is in dispute is everything around the amount, which is the date, the method, who handed it over, who wrote the entry and when it was written.

So the note field is not decoration. "Month 7 pot ₹91,000, bid ₹9,000, cash at the shop" is a sentence somebody can answer. "Payout" is not. Tag every entry with the fund month, "Month 07" or "Mar-2026", so one month can be pulled out of four hundred entries instead of turning pages.

A UPI reference survives on its own. A cash handover does not, so get the winner's signature against the amount in the book on the day, with the date in his own hand, and have whoever was in the room sign underneath. The entry then points at a signed page, and the note tells you which page to look at.

If two or three people help you collect, each of them should be entering only what they are allowed to enter, and every entry should carry the name of whoever wrote it and the time they wrote it. A payout entry created on 14 March reads differently from one created on 2 April and backdated, and in an argument that difference is usually the only thing left to argue from. Decide early who may add, and keep editing and deleting with one person.

The month's record also has to be able to leave the book. After each auction, give every member one page: subscriptions received, who is still pending, the winning bid, the payout, your commission, and the dividend and next month's subscription. The first four come straight off a day-wise report filtered to that month. The last two are arithmetic you do yourself, because nobody records them as entries. A photograph of the notebook page in the group does the job just as well. A record no member has ever seen is a record they will question.

If you keep a paper book, date every page and never erase. Strike a wrong figure through once, write the correct one beside it, and initial the correction. Nobody can tell when an overwritten number was changed.

A ruled notebook with a dated page per month, a pen that does not erase, and the discipline to write before the money leaves the room will carry a 20-member fund through all twenty months. A ledger app saves you the adding up and the page-turning. It does not save you the writing.