In India, the most popular type of investment is a fixed deposit. It's no secret that fixed deposits have been associated with investing for a long period of time due to their reputation as safe investments that provide predictable returns over a specified time period. Why;\sBecause Whatever happens to interest rates or the economy, investing guarantees a guaranteed return, plus interest on money already earned. This method allows for rapid accumulation of funds.
WHAT IS A FIXED DEPOSIT, AND HOW IS IT USED?
Banks and other non-bank financial institutions offer fixed deposits to their customers as a form of investment. The main objective of these investments is to earn a specified rate of interest on a specified sum of money over a specified time period. As is the case with savings accounts, the rate of return varies by bank but is frequently higher.
Fixed deposits can be made for any specific period of time between seven and ten years. A term deposit is also another term for a fixed deposit.
UMA CHIT-FUNDS. WHAT DO THEY MEAN?
Uma chit funds are widely available throughout the world as a more sophisticated version of Rotating Savings and Credit Associations. It enables people with limited access to banking services to save and borrow. The platform, which also boasts unmatched levels of encryption, data security, and transparency, can enable smart contracts.
WHAT IS THE RELATIONSHIP BETWEEN UMA CHIT FUNDS AND FIXED DEPOSITS?
A fixed deposit is a valid financial instrument for a specified period of time. Banks can charge premiums ranging from 7.5 percent to 9.5 percent, depending on government regulations. Premiums on fixed deposits can be withdrawn monthly, quarterly, half-yearly, or annually, or an investor may probably earn a total premium that is paid at the term's end. Before making a choice, investors should weigh the risks and rewards associated with corporate fixed deposits. Liquidating a fixed deposit is extremely difficult. If the investor uses the principal amount, he will be unable to cover any unanticipated expenses. Only upon maturity of the fixed deposit is the entire amount refunded to the investors.
In comparison to banks, chit funds offer lower interest rates, which can benefit investors. Profit is derived from interest accrued. If, on the other hand, the investor has a one-time lump sum of money, he or she may invest it in an open chit. When money is invested in a vacant chit, the investor has the option of participating in bartering and using the assets for any purpose, planned or unplanned, or they can wait until the chit expires and reap the maximum benefit.
CONCLUSION
The difficulties with fixed deposits and the banking sector have created a demand for chit funds to close the gaps. Apart from the enticing rewards, they foster a culture of saving among individuals in a community-based setting. When used appropriately and with the appropriate motivation, chits can be an excellent tool for meeting the needs of all citizens and furthering the national goal of financial inclusion
USEFUL LINKS
Website: https://umachit.fund
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AUTHORS DETAILS
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