The foreman is an authorized representative of the Chit Fund Company who manages the chit operations. The company can appoint more than one foreman if needed.

To receive the full chit amount, without any deductions for discount, at the installment specified in the chit agreement. To earn a 5% commission from the gross chit amount, as specified in the chit agreement, to cover expenses for running the chit. To collect any interest and penalties on delayed payments, as outlined in the chit agreement. To collect all subscription payments from subscribers and distribute prize amounts to those who win. To require sufficient security from winning subscribers to ensure future payments are made.

Duties of the Foreman:

* To pay the net chit amount to winning subscribers once they provide sufficient security for future payments.

* ⁠To deposit any unpaid net chit amount in a separate account in an approved bank, as stated in the chit agreement, if the winning subscriber cannot withdraw the net chit amount until the next auction.

* ⁠The foreman must inform the subscriber and the registrar in writing about this deposit and the reasons for it.

* To distribute a share of the discount or dividend among subscribers by adjusting it toward the next installment's subscription, following the terms of the chit agreement.

Purpose of Auctions:
Auctions are essential for selecting the prized subscriber in each chit fund installment.

⁠Selection of Prized Subscriber:
* Determined by either a lot or an auction at the time and place specified in the chit agreement.
* Each auction lasts for 5 minutes from the start.

Role of Foreman:
* The foreman conducts the auction proceedings.
* In case of disputes, the foreman's decision is final.

Eligibility to Participate:
Subscribers must be up-to-date on their payments.
* Subscribers can submit written bid offers with the maximum discount they are willing to forgo.
* Written bids must be submitted to the foreman at least one day before the auction and can be withdrawn only 24 hours before the auction.

Participation Requirements:
Only subscribers or their authorized representatives/proxies, with written authorization, are permitted to participate.

Auction Rules:
* Auction begins with a 5% foreman’s commission on the chit value.
* Bidders can raise the discount up to a maximum (25%, 30%, 35%, or 40% of the chit value) as specified in the chit agreement.
* Each bid must increase in multiples of 100 rupees.

Selection of Prized Subscriber:
* The non-prized subscriber offering the highest discount within the allowed maximum is declared the prized subscriber.
* If multiple bidders offer the maximum discount, the selection is made by a lot among those bidders.

Bidding refers to the discount that a subscriber is willing to forgo in a draw to receive the prize amount. Subscribers offer the highest discount within the set time limit, staying within the maximum limit of 40% as specified by the Chit Funds Act, 1982.

A Prized Subscriber is a subscriber who has received or is eligible to receive the net chit amount. A prized subscriber who draws the net chit amount must pay the foreman the amount due for their ticket at each installment by the specified due date.

To receive the net chit amount, a prized subscriber must provide adequate security or sureties, as approved by the foreman, to ensure future subscription payments are made on time.

If no bids are received during an auction, a lot will be drawn from the non-prized subscribers once the 5-minute period ends. The subscriber selected by the lot will be declared the prized subscriber and will be entitled to receive the gross chit amount for their ticket, minus the foreman’s commission.

The share of discount is the portion of the discount amount that a subscriber gives up in a draw to receive the prize amount. From this discount, the foreman retains a commission, and the remaining balance is proportionately distributed among all subscribers at each chit installment.

Once a person wins an auction, they are excluded from participating in future auctions but are still required to contribute their share. In the event that no bids are placed during a particular month, the entire amount becomes available for a lucky draw or lottery. Through a lucky dip, one member is declared the winner of the funds.