The Chit Funds (Amendment) Bill 2018 : Download ( as Introduced in Lok Sabha)

By | March 14, 2018
(Last Updated On: March 14, 2018)

The Chit Funds (Amendment) Bill 2018

STATEMENT OF OBJECTS AND REASONS

The Chit Funds Act, 1982 was enacted to provide for the regulation of chit funds
which are indigenous business in India and have conventionally satisfied the financial
needs of the low-income households. The chit is a mechanism which combines credit and
savings in a scheme, in which a group of individuals come together for a pre-determined
duration and subscribe a certain sum of money by way of periodical instalments and each
such subscriber, in his turn as determined by lot or by auction or by tender or any other
specified manner, gets the collected sum. In this way, people who are in need of funds and
those who want to save are able to meet their requirements simultaneously.

2. In past, concerns had been expressed by various stakeholders regarding challenges
being faced by the chit business. Therefore, the Central Government constituted a Key
Advisory Group on Chit Funds to review the existing legal, regulatory and institutional
framework for Chit Funds and its efficacy and to suggest legal and regulatory initiatives
required for orderly growth of the said sector. The Key Advisory Group submitted its
recommendations relating to improvements in the institutional and legal structure to further
develop the chit business in order to reduce the regulatory burden of the chit business and
to protect the interest of the subscribers of the chits.

3. The Parliamentary Standing Committee on Finance (Sixteenth Lok Sabha), in its
twenty-first Report on Efficacy of Regulation of Collective Investment Schemes (CIS), Chit
Funds, etc., had also recommended to finalise the legislative and administrative proposals
for strengthening and streamlining of the registered Chit Fund sector. Further, the said
Committee, in its thirty-fifth Report on the Action Taken by the Government on the
Recommendations contained in the twenty-first Report, had recommended the need to quickly
firm up the legislative and administrative proposals for the Chit Funds sector

4. In view of the above, it has been decided to amend the Chit Funds Act, 1982.
Accordingly, the Chit Funds (Amendment) Bill, 2018, inter alia, proposes—
(a) the use of “fraternity fund” also for chits by amending sections 2(b) and 11;
(b) to allow the mandatory presence of two subscribers, as required under section
16(2), either in person or through video conferencing duly recorded by the foreman;
(c) that where the presence of the mandatory two subscribers was through videoconferencing,
the minutes of proceedings should be signed by them within two days;
(d) the increase of ceiling of foreman’s commission from five per cent. to seven per
cent. under section 21;
(e) to enable the foreman to have a right to lien for the dues from subscribers, so that
set-off is allowed by the chit fund for subscribers who have already drawn funds, so as to
discourage default by them;
(f) to amend section 85(b), so as to confer power upon the State Government to
specify the amount, by notification, upto which any chit fund shall be exempted under the
said section

5. The Bill seeks to achieve the above objects.

NEW DELHI; ARUN JAITLEY
The 28th February, 2018.

Download Chit Funds (Amendment) Bill 2018

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