Rajya Sabha passes Chit Fund (Amendment) Bill, 2019

Rajya Sabha passes the Chit Fund (Amendment) Bill, 2019.

The said bill was passed by Lok Sabha on 20-11-2019.

Purpose of the Bill:

In order to facilitate orderly growth of the chit fund sector, to remove bottlenecks being faced by the chit fund industry and to enable greater financial access to people, the Chit Funds (Amendment) Bill, 2019, inter alia, proposes the following, namely:—

(a) insertion of the words “fraternity fund”, “Rotating Savings and Credit Institution” in clause (b) of Section 2 which defines “chit” and also in Section 11, to signify its inherent nature and distinguish its working from “prize chits” which are banned under a separate legislation;

(b) to substitute the expressions “gross chit amount”, “share of discount” and “net chit amount” for the expressions “chit amount”, “dividend” and “prize amount” respectively in the Act, in order to remove confusion with respect to illegal prize chits;

(c) to revise the prescribed ceiling of aggregate chit amount from rupees one lakh to rupees three lakhs for individuals and from rupees six lakhs to rupees eighteen lakhs for firms, which have not been revised since 2001;

(d) to allow the mandatory presence of two subscribers, as required under sub-section (2) of Section 16, either in person or through video conferencing duly recorded by the foreman;

(e) where the presence of the mandatory two subscribers is through video conferencing, the minutes of the proceedings to be signed by them within two days of the date of the draw;

(f) to increase the ceiling of foreman’s commission from five per cent. to seven per cent. under Section 21;

(g) to enable the foreman to have a right to lien against the credit balance in other non-prized chits;

(h) to amend clause (b) of Section 85, 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 Act.

*Please follow the link to read the Bill — Chit Fund (Amendment) Bill, 2019

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