Bank Loan vs Chit Funds vs RD.
| Feature | Bank Loan | Chit Funds | Recurring Deposit (RD) |
|---|---|---|---|
| Who can join? | Only those with good credit | Anyone | Anyone |
| Purpose | Only for borrowing | Save & Borrow together | Only for saving |
| Returns / Interest | You pay 8–12% interest | Earn up to 14% per year | Fixed 5–7% per year |
| Funds Access | Lump sum, once (immediate) | Anytime via monthly auction | Only after maturity |
| Eligibility | Strict (paperwork, credit checks) | Simple, flexible joining | Flexible |
| Paperwork | High | Minimal | Minimal |
| Flexibility | Rigid terms | High—borrow or save anytime | Locked till maturity |
| Community Benefits | No | Yes—group support system | No |
| Profitability | Low (high cost) | High (if planned smartly) | Low (fixed returns) |
| 📊 Returns on ₹1,00,000 Over 1 Year | |||
| Net Cost / Return | ₹10,000 paid as interest (10%) | ₹12,000 earned (12%) | ₹6,000 earned (6%) |
| Effective Profit / Loss | −₹10,000 | +₹12,000 | +₹6,000 |