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.