New Regulations on creating funds without prior sanction; Lok Sabha passes Chit Funds (Amendment) Bill, 2019

The Lok Sabha today passed the Chit Funds (Amendment) Bill, 2019 by voice vote. The bill seeks to amend the Chit Funds Act, 1982, which regulates chit funds and prohibits a fund from being created without the prior sanction of a State Government.

The amendments have been made to facilitate the orderly growth of the chit fund sector to remove bottlenecks and enable greater financial access to people.

Under the legislation, the prescribed ceiling of aggregate chit fund amount for individuals has been raised from one lakh rupees to three lakh rupees and in case of firms, the limit has been raised from 6 lakh to 18 lakh rupees.

Besides, words chit amount, dividend and prize amount have been substituted with terms gross chit amount, the share of discount and net chit amount. The legislation also increases the maximum commission of a foreman from five per cent to seven per cent and also allows the foreman a right to lien against the credit balance from subscribers.

Replying to a debate on the bill in the House, Minister of State for Finance Anurag Thakur said, the bill has been brought with an intention of protecting the interests of investors belonging to the poor and marginalized section of the society.

He said, the government also wants that the invested money should be returned on time to those investors who have been cheated in such schemes.

While answering a question, Mr Thakur said, the government has also conducted financial literacy programmes in different parts of the country to create awareness among the people for such schemes. Referring to Jan Dhan Yojana, the Minister said, till 16th of last month, over 37 crore bank accounts of poor people had been opened and over one lakh crore rupees were deposited.

He said, the direct collection has witnessed a significant jump from 6.35 lakh core rupees in 2013-14 to 11.38 lakh crore rupees during last fiscal.

The government is committed to make the country a five trillion dollar economy by 2025, he added.