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A tontine scheme is a small, community-based financial arrangement that benefits individuals or small traders who lack formal collateral but need quick access to cash for business, personal, or family matters, such as weddings, medical bills, or funerals.

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It functions as a rotating savings and loan system. Members contribute a fixed amount each month into a common pool, and each month participants may bid for the right to use that pooled sum by offering an interest amount they are willing to pay. The highest bidder receives the pool for that month, while the remaining members continue contributing and wait for their turn.

 

The activity in this gathering is known as Biao Hui (标会), which can be loosely translated as 'bidding meeting' gathering amongst members. In Hinghwa, the money in the pool is known as 'Hui Lui', where members can bid. The highest bidder will get the money. The bid is in the form of interest that one is willing to pay for that sum of money. Usually, someone in the clan who is trustworthy will be asked to start a grouping because trust is very important in such activities.

The Meeting

Once a month, the head will invite all members to attend the bidding at his place. The date is usually agreed in advance and one that is easy to remember, such as the 1st day, 15th day or last day of the calendar month.

Assuming there is a total of 20 members, including the leader and all agreed to a monthly contribution of $1000. The amount is known and agreed upon by interested members before they join because it is a monthly commitment. Each member will have one share, which allows them to bid only once. However, some members may want to have two shares, so that they can bid twice. The bidding process will commence when all members are present.

The bid shall be opened once a month, and the monthly bid price is agreed at $1000. As the 20 members gather, each will contribute $1000 to the head. The head would then have collected $1000 x 19 members = $19000. As a matter of privilege for being the head, he will get to use the money without having to bid for it, and it is interest-free. Let's assume that the bidders are identified as 'Party One' to 'Party 20', with the head as Party One.

The following month, assuming it is February, the second bidding begins.

In the second bidding, 19 members of the 'live members' (活会; huó huì) will bid with the interest they are willing to pay. The head who had earlier taken the first bid is now considered a 'non-live' member (死会; Sǐ huì), which means he cannot bid, except to fulfil his monthly obligations.

Assuming in this second bidding (February) Party Two gave the highest bid of $80 and won the bidding. He will receive from Party One a sum of $1000 because he is considered a 'non-live' member (死会; Sǐ huì) or 'non-bidding member'. In essence, Party One is merely returning by instalments what he had taken earlier as of right. The rest of the 19 members will only need to contribute $920. That means Party Two will get a total of $1000 + $920 x 18 = $17560. What this means is that the 'live members' will each get an instant interest of $80 for the $920 they had each contributed for the month. Party Two will now join Party One as a 'non-live' member (死会; Sǐ huì). The following month, Party Two will have to contribute $1000 to the winning bidder every month.

In the third month (March), a third meeting for 18 live members is held. Assuming Party Three is the highest bidder of $120. So, each of the 17 'live members' will contribute $880 to the pool, and Party One and Party Two will each contribute their share of $1000 each. This means Party Three will get $1000 x 2 = $2000 + (17 x $880) = $16960. Party Three will now join Party One and Party Two as a 'non-live' member (死会; Sǐ huì), which means he too will have to contribute $1000 to the rest of the existing 'live members'.

In the fourth month (April), a fourth meeting for 17 'live members' is held. Assuming Party Four is the highest bidder of $90. So, each of the 16 'live members' will contribute $910. This means Party Four will get $1000 x 3 = $3000 + (16 x $910) = $17560. Party Four will now join Party One, Party Two, and Party Three as a 'non-live' member (死会; Sǐ huì), which means he too will have to contribute $1000 for the rest of the existing 'live members'.

The bidding will go on to the last 'live member'. This means there are now 19 ' non-live members who will have to contribute $1000 each. The last 'live member' would then get $1000 x 19 = $19000. This is like getting back his principal sum of $1000 that he put in every month, not forgetting that he had earned the interest throughout by contributing less than the required $1000 to the successful bidders.

Finance Scheme: Now, a recap of what Party Two gets. He bid $80 on the second bidding and got $17560 instead of $19000, so he actually paid an immediate interest of $1440 upfront. The benefits that he got were that he got to use the pool of money for his immediate needs, and he only needed to pay back his 'loan' in monthly instalments, which was his monthly obligation. So the scheme works like taking a loan from a finance company or banks without collateral, and paying back by instalments.

The 'Meeting' Head
(会头; Hui Tou)

In the case of the 'head' (会头; Hui Tou), he will be held accountable if a successful bidder runs away with the money. This was what happened to my parents. The member was the daughter of a known village friend of my parents. Unfortunately, my parents had to fork out the money lost. It was a terrible time for the family because we were not rich. Very unfortunately for the lady who ran away with the money, destiny caught up with her, and she was burned alive in a burning bus that had crashed.

 

Thankfully, the rest of the passengers managed to escape in the pitched dark highway. My dad was often asked to organise it simply because he was a trusted clan member.

The Meeting 'Leg'
(会脚; Huì jiǎo)

In the case of the 'ordinary' member (会脚; Huì jiǎo), they too will lose out if the 'head' runs away with the money, which is not uncommon, as more and more people learnt to organise it themselves with all kinds of people.

Benefits to Members

If all goes well, the scheme has great benefits for members who get to use the money in times of need; most of them were ordinary folks. The one who will benefit most is the last 'live' member because he earns all the interest without having to bid for it.

Risk Factor

The scheme has no legal status; it is based purely on trust. It is often not recognised in law, and members run the risk of losing their money if the 'head' or 'dead members' run away or default in their subsequent payments. There is no legal recourse because if they report, all may go to jail or be fined for operating an illegal operation. As Robert Tan puts it: "the head is usually someone with a sweet tongue who will have no problem in gathering people for the scheme". The problem is that such grouping is not based on clan but on the trust of one or two persons. Such gathering often creates many problems because there is no clan compulsion, so the chances of someone running away with the pool money is very high. One such case that happened on a national scale was the now-defunct Gemini Chit Fund. Thousands of people lost their life savings and some their lives.

However, the 'tontine' runs by the clan helps to complement the Chinese Bang (帮; Bāng) structure or 'Help' structure. This is perhaps one of the most important components of the 'Bang' Structure.

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Contributions: Supt. (Ret.) Lee Swee Thin