- The Union Cabinet has approved the introduction of the Chit Funds (Amendment) Bill,2019 in Parliament.The bill seeks to amend the Chit Fund Act,1982.
- The 1982 Act regulates chit funds and prohibits a fund from being created without the prior sanction of the state government.
- Under a chit fund,people agree to pay a certain amount from time to time into a fund.Periodically,one of the subscribers is chosen by drawing a chit to receive the prize amount from the fund.
- The Act specifies various names which may be used to refer to a chit fund.These include chit,chit fund, and kuri.The Bill allows a chit fund company to mention under their name as ‘A ROSCA Institution’(Rotating Savings & Credit Association).This will help in distinguishing their business from other unconnected business.
- The Act specifies that a chit will be drawn in the presence of at least two subscribers.The Bill seeks to allow these subscribers to join via video-conferencing.
- Under the Act,the ‘foreman’ is responsible for managing the chit fund.He is entitled to a maximum commission of 5% of the chit amount.The Bill seeks to increase the commission to 7%.
- Currently,the Chit Fund Act 1982 does not apply to chits that are smaller than ₹100.The Bill seeks to remove the limit of ₹100 with the State government being allowed to set the limit over which the provisions of the Act would apply.
