Section 2b of the under chit fund act 1982 defines chit as. The dominant purpose of the act is to regulate the chit and control the activity of the foreman and protect the interests of the subscribers. An act to provide for the regulation of chit funds and for matters connected there with. Private register chit funds there are a number of privately held register chit funds. At this juncture, a mention on the central chit fund act, 1982 seems apt.
In the chit funds act, 1982 hereinafter referred to as the principal act, in section. It extends to the whole of india except the state of jammu and kashmir. Important points from the central chit funds act 1982. Section 2b of the chit fund act, 1982 chit means a transaction whether called chit, chit fund, chitty, kuree or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money by way of periodical instalments over a definite period and that each such subscriber shall, in. Chit fund is a kind of savings scheme practiced in india. For instance, the andhra pradesh chit funds act 1971 had previously required the chit managers in that state to deposit only 50% of the chit value with the registrar of chits prior to the commencement of the chit scheme.
Feb 23, 2015 such schemes fall outside the purview of official chit records. Chit funds act, 1982 in 1982, the ministry of finance enacted the chit funds act to regulate the sector. Chit funds act, 1982 bare acts law library advocatekhoj. Zcf is indias first interestfree chit fund company. The chits funds act,1982 statement of objects and reasons 1a. Chit funds act 1982 pdf a chit fund is a type of rotating savings and credit association system practiced in india. State government chit funds fall in the concurrent list and states are free to issue their own law. I am not an expert when it comes to mutual funds, but i can help u understand everything about chitfund. Chit funds chit funds act 1982 often microfinance organizations. May 23, 20 chit funds act, 1982 in 1982, the ministry of finance enacted the chit funds act to regulate the sector. According to section 2b of the chit funds act, 1982. A chit fund is a type of rotating savings and agreement among different persons i.
For instance, the andhra pradesh chit funds act 1971 had previously required the chit managers in that state to deposit only 50% of the chit value with the registrar. A chit fund company is a company that manages, conducts, or supervises such a chit fund, as defined in section of the chit funds act, 1982. Currently enforcement remains the primary responsibility of the state government. Chit funds as an innovative access to finance for lowincome households. Chit fund a chit fund is a type of rotating savings and credit association system practiced in india chit fund schemes may be organized by financial institutions, or informally among friends, relatives, or neighbours. May 06, 20 the chit funds act 1982 lays down some important ground rules for chit funds. The central chit funds act, 1982, outlines other rules and regulations to run a chit fund scheme. It is also changing the 1982 law to allow eauction of chit funds. Heres all you need to know about chit fund schemes. Under the act, the central government can choose to notify the act in different states on different dates.
Chit funds act 1982 section 25 liability of foreman to. The chit funds act, 1982legislative department ministry of law. The chit funds amendment bill, 2019 which seeks to amend the chit funds act, 1982 was introduced in lok sabha this month. The act says that the prize money, net of the foremans commission, cant be less than 60% of the total value of the chit. The chit is a mechanism which combines credit and savings in a scheme, in which a group of individuals come together for a predetermined. A chit fund is a type of rotating savings and credit association system practiced in india. Be it enacted by parliament in the thirtythird year of the republic of india as follows. S18 the object of the chit funds should be to serve the poor and middle class and the average traders. Mar 14, 2018 a bill further to amend the chit funds act, 1982. Kerala state financial enterprise and mysore sales international limited are examples of these type of chit funds. The 1982 act regulates chit funds, and prohibits a fund from being created without the prior sanction of the state government. Pdf on jun 1, 2002, james manalel and others published chit financing find, read and cite all the research you need.
Chit fund is defined as per the section 2b of the chit fund act, 1982. The lok sabha on wednesday passed the chit funds amendment bill, 2019. Recently, while working with one of my clients, i was introduced with the concept of chit funds. Under this law, registration of the chit fund business can be done only by the respective state it prohibits a fund from being created without the prior sanction of the state government.
The chit funds amendment bill, 2019 ias parliament. The chit funds act 1982 in india bare acts, banking and insurance, business and corporate, constitutional, consumer laws, criminal law, energy, environmental, family and inheritance, heritage and national importance, immigration law, labor law, the chit funds act 1982 national security, others, procedural and administration, property related, public utilities, shipping laws, tax laws. The chit funds act, 1982, is within the leigislative competence of the parliament. Agents or commission agents who collect chit subscription regularly at the door of the clients. Governments may consider starting chit funds at strategic places as model foremen with the object of offering effective competition to private chit funds and thus acting as a disciplining factor. Hence there is the need to examine the limitations of the existing chit legislation and the whole gamut of it in the light of the experience gained so far. All branches and offices in singapore of the company shall be deemed to be one chit fund company for the purposes of this act. Jan 05, 2019 chit funds act 1982 pdf a chit fund is a type of rotating savings and credit association system practiced in india. A chit fund is a very popular type of savings scheme in. Be it enacted by parliament in the thirtythird year of the republic of india as follows chapter 1 preliminary.
An act to provide for the regulation of chit funds and for matters connected therewith. What are chit funds and how are they different from banks. Be it enacted by parliament in the seventieth year of the republic of india as follows. Copies of chit agreement to be given to subscribers.
Appendix ii table of fees, levy of fees under sections 62 and 63 of the chit funds act, 1982, pdf icon 195. The bill seeks to streamline operations of chit funds in india and protect the interests of investors, mainly the economically weaker sections of the society. I was aware of sarada chit fund scam but not completely aware of working behind the chit fund. Chit fund schemes may be conducted by organised financial institutions, or may be unorganized schemes conducted between friends or relatives. The chit funds act, 1982 was enacted to provide for the regulation of chit funds and for matters connected therewith. It shall come into force on such date as the central government may, by notification in the official gazette, appoint, and different dates may be appointed for different states.
The chit funds in india are regulated by the chit fund act, 1982. Government of kerala published the chit fund rules 201204062012 notification government order nog. Provided further that before chit funds act 1982 to register a chit under the first proviso, the foreman shall be given a reasonable opportunity of sct heard. In this act, unless the context otherwise require, aapproved bank means the state bank of india constituted under section 3 of the state bank of india act, 1955 23 of 1955, or a subsidiary bank constituted under section 3 of the state bank of india subsidiary banks act, 1959 33 of 1959, or a corresponding new bank constituted under section 3 of. As per the act, a chit means a transaction whether called chit, chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specif. An act to provide for the regulation of chit funds and for matters connected therewith be it enacted by parliament in the thirtythird year of the republic of india as follows chapter 1 preliminary. Organised chit fund schemes are required to register with the registrar of firms, societies and chits. The introduction of the central chit funds act, 1982 7 was expected to take care of this exodus. The chit funds amendment bill, 2019 introduced in lok sabha. One key guideline is regarding the discount that a member is willing to take on the chit. Due to the rigid provisions of the 1975 kerala chitties act, many fund.
The draft bill gives them more freedom to regulate such funds. In some variations of chit funds, the savings are for a specific purpose. However, the state acts may override certain provisions as deemed necessary. Chit fund is where you can invest your money on monthly basis called installments. Which investment is better, a mutual fund or a chit fund. According to section 2b of the chit funds act, chit means. The chit funds act 1982 indian bare acts india bare act. Credit associations pdf, williams college, archived from the original pdf. Chit funds act, 1982 mylegalwork online legal help. Unregistered chit it is illegal to run unregistered chit fund. 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 lowincome households. An act to provide for the regulation of chit funds and for matters connected with it, law publishers india pvt. Chit fund act 1982 is a central act to provide for the regulations of the chits fund business and for the matters related thereon. Chit funds act, 1982 india code link chit funds act, 1982 downloadable link 19th august, 1982 amended by chit funds amendment act, 2001 10 of 2001 amended by act no.
In exercise of the powers conferred by section 89 of the chit funds act, 1982. The chits funds act, 1982, indian bare acts at, a website for indian laws and bareacts, legal advice and law documents in india. Any person or company intends to carry chits business shall obtain prior sanction order p. Be it enacted by parliament in the sixtyninth year of the republic of india as follows. These funds are registered as per chit funds act 1982. The chit funds amendment bill, 2019 was introduced in lok sabha on august 5, 2019. To understand how the chit fund companies work, we must understand few terms which will be used during the process. New bill to ban unregulated deposit schemes and chit funds.
Act, then chit business refers to a transaction within the meaning of the word chit. In india, the chit funds are regulated by the chit funds act of 1982 enacted on august 19, 1982. Short title, extent and commencement 1 this act may be called the chit funds act, 1982. Before that, chit funds were not governed by any central law. Andhra pradesh chit funds rules, 2008 bare acts live. The chit funds act 1982 latest breaking news, pictures, videos, and special reports from the economic times. Chit fund business in india is regulated under the chit fund act 1982. Chit fund act department of goods and services tax. Subsection 3 of section 1 of the act, inter alia, confers powers upon the central government to appoint different dates for commencement of the said act for different states. Short title and commencement 1 this act may be called the chit funds amendment act, 2019. These require the company or organization running such a scheme to be registered under the act, to. Central act, 40 of 1982, the government of andhra pradesh, in consultation with. For example, let us consider chitvalue10lakhs chit. The act defines chit as any deal or transaction which can be called in different names like chit, chit fund, kuri or chitty and persons enter into contracts specifying that all of them shall contribute an amount or even grain instead of money.
The finance ministry is amending the chit funds act to insulate small savers from ponzi schemes floated by firms such as saradha and rose valley. Oct, 2017 let us understand how the chit fund companies or the committee works and will then proceed to how the company is registered in terms of chit fund act, 1982. View chitfund scam from law 3332 at gujarat national law university. The chit fund is a type of banking scheme aimed to save money under different plans.
The chit funds act 1982 blogs, comments and archive news on. However many states including kerala have not yet adopted the central chit funds act. Act to override other laws, memorandium,articles,etc. Each month, the subscribers put in their monthly installments into the pot. New rules for chit funds and deposit schemes 4 min read. Under a chit fund, people agree to pay a certain amount from time to time into a fund. U65992ka2011ptc061044, and is registered by the government of karnataka under the chit funds act, 1982. Reffering to the chit funds act, 1982, a chit has been defined as an arrangement under which a. Act 28 of 1971 revised edition 20 31st october 20 an act to provide for the licensing and regulation of chit funds. Zayd chit funds indias 1st interestfree chit funds. In terms of subsection4 of section 8 of the chit funds act, 1982 central. Oct 04, 2011 however, the state acts may override certain provisions as deemed necessary. Oct 12, 2017 a chit fund is a savings cum borrowing scheme, wherein a specified number of people also known as the subscribers enter into an agreement also known as the chit agreement to subscribe a certain sum of money by way of regular periodical install.
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