Lawstreet Journal

Lok Sabha Passes Chit Funds (Amendment) Bill, 2019 [Read Bill]

Lawstreet Journal 21 Nov 2019 6:41pm

Image courtesy: Lawstreet Journal Legislative Corner Lok Sabha Passes Chit Funds (Amendment) Bill, 2019 [Read Bill]

The Lok Sabha on November 20, 2019, passed the Chit Funds (Amendment) Bill, 2019, that seeks to amend the Chit Funds Act, 1982, to streamline operations of chit funds in India and to protect the interests of investors, mainly the economically weaker sections of the society.

Under a chit fund, people agree to pay a certain amount from time to time into a fund.  Periodically, one of the subscribers is chosen by drawing a chit to receive the prize amount from the fund.

The Bill was introduced in the Lok Sabha on August 5, 2019, but was then forwarded to the Standing Committee on Finance which gave its recommendations in August 2018.

The main changes proposed by the Bill are:- 

  • Names for a chit fund: The Act specifies various names which may be used to refer to a chit fund. These include chit, chit fund, and kuri.  The Bill additionally inserts ‘fraternity fund’ and ‘rotating savings and credit institution’ to this list.
  • Substitution of terms: The Act defines certain terms in relation to chit funds. It defines: (a) ‘chit amount’ as the sum of subscriptions payable by all the subscribers of a chit; (b) ‘dividend’ as the share of the subscriber in the amount kept apart for running the chit; and (c) ‘prize amount’ as the difference between chit amount and the amount kept apart for running the chit.  The Bill changes the names of these terms to ‘gross chit amount’, ‘share of discount’ and ‘net chit amount’, respectively.
  • Presence of subscribers through video-conferencing: The Act specifies that a chit will be… Continue Reading...

    Tagged: lok sabha  
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