House passes chit funds Bill

Tribune News Service

New Delhi, November 28

With the Rajya Sabha approving it, Parliament today passed a Bill to effect three-fold increase in monetary limits for chit funds and to enhance commission for foremen, persons responsible for managing such funds.

The Chit Funds (Amendment) Bill, 2019, was passed by voice vote in the Rajya Sabha. The Bill got Lok Sabha’s approval on November 20. The maximum chit amount is proposed to be raised from Rs1 lakh to Rs3 lakh for those managed by individuals or less than four partners, and from Rs6 lakh to Rs18 lakh for firms with four or more partners.

The maximum commission for a foreman is proposed to be raised from 5 per cent to 7 per cent and at the same time it allows him a lien against the credit balance from subscribers. Minister of State for Finance Anurag Thakur said the Bill also introduced words such as “fraternity fund”, “rotating savings” and “credit institution” to make chit funds more respectable.

Piloting the Bill, he said chit funds were legal and one should understand these were different from unregulated deposit schemes or ponzi schemes. The Bill provides for substituting terms like “chit amount”, “dividend” and “prize amount” with “gross chit amount”, “share of discount” and “net chit fund”, respectively. It further propo es to allow subscribers to join the process of drawing chits through video-conferencing.

About members’ objection to this clause, Thakur said all subscribers should be present at the time of draw of chit fund, but if some were busy or unable to attend, they should have the option of video conference. He also told the House that the Bill removes the limit of Rs 100 (which was set in 1982), and allows the state governments to specify the base amount over which the provisions of the Act would apply.