Share of discount is the portion of the discount amount available, which is the quantum of the amount that a subscriber forgoes in a draw in order to get the prize amount. In the quantum of discount, the foreman retains the commission, and the balance amount is distributed proportionately among all the subscribers at each instalment of the chit.

Bidding is nothing but a discount, which is a quantum of the amount that a subscriber forgoes in a draw in order to get the prize amount. The subscribers forego the highest discount during the prescribed time limit within the ceiling fixed by the Chit Funds Act, 1982, i.e. 40%.

In the event that no bidder is forthcoming in an auction, a lot will be drawn from the non-prized subscribers at the close of the prescribed time (i.e. 5 minutes), and the subscriber drawn will be declared as a prized subscriber. He will be entitled to receive the gross chit amount for his ticket less the foreman commission.

In a Chit Fund Organisation, auctions play a vital role, which is crucial for identifying the prized subscriber in each auction. The subscriber who is to get the prize amount at any instalment shall be determined by a lot or by an auction at the place and time mentioned in the chit agreement. The time allowed for the auction is 5 minutes from the commencement of the proceedings. The proceedings will be regulated by the foreman, and in case of a dispute, the decision of the foreman is final.