Prize chits and money circulation schemes banning act, 1978. Organised chit fund schemes are required to register with the registrar of firms, societies and chits. Majority of the current and noncurrent chit fund members belong to lowincome households. The act says that the prize money, net of the foremans commission, cant be less than 60% of the total value of the chit. Chit funds in india are governed by various state or central laws. In the chit funds act, 1982 central act 40 of 1982 hereinafter referred to as the principal act, i section 70 shall be renumbered as subsection 1 thereof and in sub. Appendix means appendix i or as the case may be appendix ii to these rules 3. Organised chit fund schemes are required to register with the registrar or firms, societies and chits. An act to provide for the regulation of chit funds and for matters connected. The regulator of chit funds is the registrar of chits who is appointed by the respective state governments under section 61 of chit funds act, 1992.
Chit fund schemes may be conducted by organised financial institutions, or may be unorganized schemes conducted between friends or relatives. Notification in exercise of the powers conferred by section 89 of the chit funds act, 1982 central act, 40 of 1982, the government of andhra pradesh, in consultation with the reserve bank of india, hereby makes the following rules chapter i. Both the centre and state can frame legislation regarding chit funds. With appropriate changes, this act was adopted, with effect from 15th july, 1964, in the union territory of delhi. Supplement for advanced tax laws and practice 5 clause 26a government means the departments of. In exercise of the powers under section 69 of the uttar pradesh chit. Copies of chit agreement to be given to subscribers. The chits funds act,1982 statement of objects and reasons 1a. 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 estimated turnover of registered chit companies all over india as of now is exceeding rs 35,000 crores per annum. Chit funds act 1982 defines a chit fund company as a company which conducts, manages and supervises a chit fund scheme.
A chit agreement, that is an agreement relating to a chit as defined in clause 2 of section 2 of the madras chit funds act, 1961 as ex tended to the union. Whew it is expedient to provide for the regulation of. Be it enacted by parliament in the sixtyninth year of the republic of india as follows. In exercise of the powers conferred by subsection 3 of section 1 of the chit funds act. Maharashtra chit funds act, 1974 complete act bare act. An act to provide for the regulation and control of chit funds in the state of maharashtra. Section 2b of the under chit fund act 1982 defines chit as.
Chit funds chitty kuri miscellaneous nonbanking company. The chit funds act of 1982 was amended to incorporate stringent measures to stop alleged fraud. These changes have become operative from the beginning of this year. The chit funds act 1982 lays down some important ground rules for chit funds.
An act to provide for the regulation of chit funds and for matters connected terem. Any person or company intends to carry chits business shall obtain prior sanction order p. Act means the chit funds act, 1982 central act 40 of 1982. They are basically lotteries, and i believe still exist in india. State of origin may exercise and perform in respect of the chit. The chit transaction which is based on sound economics none stand to lose and all stand to gain was in practice even during the time of chandragupta maurya.
Block will be used to display browser versions to be supported by portal. Chit fund act1982 is a central act to provide for the regulations of the chits fund business and for the matters related thereon. 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. The act aims to ban the promotion and circulation of prize chits and money circulation. Chit funds have unique features of dual benefit for savings and also borrowings, combined in a single instrument. At present chit funds are governed by chit funds act of 1962, rbi act of 1934, and sebi act of 1992 etc. An act to provide for the regulation of chit funds in the state and for. It would be illegal to operate one in the united states although it was the origin of the savings and loan industry in the early 19th century in cincinnati and philadelphia. The increasing popularity of chit funds even in those areas where the banking habit of the people is wide spread shows that the scheme is basically sound and cannot be brushed aside as an irrelevant or anachronistic business practice. Under the act chit fund act department of goods and.
Recently, while working with one of my clients, i was introduced with the concept of chit funds. Act 28 of 1971 revised edition 20 31st october 20 an act to provide for the licensing and regulation of chit funds. Authority in the exercise of its functions and duties under this act. Financial intelligence unit india, ministry of finance, govt. The law governing and regulating the business of chit fund in india is the indian chit fund act, 1982 herein after referred to as the act. Thus,registration and regulation of chit funds are carried out by state governments under the rules framed by them. The prize chits and money circulation schemes banning. Subsidiary legislation of chit funds act singapore. Provided that a sanction obtained under this subsection. Chit funds are governed by the chit funds act, 1982. Discount, divident, drawing, firm, foreman, nonprized subscriber, prize amount, subscriber, ticket. One key guideline is regarding the discount that a member is willing to take on the chit.
Kerala chit funds rules, 2012 come into force on 05062012 rule 2. Be it enacted by parliament in the thirtythird year of the republic of india as follows. I was aware of sarada chit fund scam but not completely aware of working behind the chit fund. Now chit funds are trying to carve out a cleaner identity, a campaign that culminated in a slew of amendments to the chit fund act. Among other things, the act requires each chitfund company to obtain a license from the state government and rules minimum capital requirements. It extends to the whole of india except the state of jammu and kashmir. In this act, unless the context otherwise requires, a conventional chit means a transaction whether called chit, chit fund, kuri or by any other name by or under which a person responsible for the conduct of the chit enters into an agreement. In exercise of the powers conferred by section 2 of the union territories. Chit fund businesses can be registered and regulated only by the respective state governments. According to a report of asian development bank, the turn over of some 1066 chit fund companies, as far back as 1986 was, an astounding rs. Central government has not framed any rules of operation for them.
In exercise of the powers conferred by subsection 3 of section 1 of the. Regulator of chit funds is the registrar of chits appointed by respective state governments under section 61 of chit funds act. Additionally, 96 per cent of the current and noncurrent chit fund members think that chit funds are safe. Short title, extent and commencement 1 this act may be called the chit funds act, 1982. Amended chit fund act brings tighter norms, transparency. The amendments to chit funds act aim to facilitate orderly growth of the sector and remove bottlenecks being faced by the industry, thereby enabling greater financial access of people to other. Prohibition of chit funds conducted in contravention of this act. While the original draft of the act did not rule the auctions in a rosca, the currently effective revision of 1993 also puts a. According to section 2b of the chit funds act, 1982.
The bill also proposes to amend a section of the act to remove the ceiling of. It becomes easy when the chit funds are operated by disciplined institutions such as the commercial bank, a. The prize chits and money circulation schemes banning act, 1978 was enacted on 12th december, 1978. The act specifies various names which may be used to refer to a chit fund. Under the chit fund act of 1962, businesses can be registered and regulated only by the respective state governments. Chit fund business is regulated under the central act of chit funds act, 1982 and the rules framed under this act by the various state governments for this purpose. 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. States like tamil nadu, andhra pradesh and kerala had enacted legislation e. I an act to provide for the regulation of chit funds in the pstae of tamil nadu. Received the assent of the president on the 22nd june 1 961.
The act classifies chits into conventional chits and prize chits. Act to override other laws, memorandium,articles,etc. In exercise of the powers conferred by section 89 of the chit funds act, 1982. Section 4 1 of the chit funds act, 1982 which states that no chit shall be commenced or conducted without obtaining the previous. The tamil nadu chit funds act of 1961, seeks to regulate the chit fund business in the state of tamil nadu. No chit shall be commenced or conducted without obtaining the previous sanction of the state government within whose jurisdiction the chit is to be commenced or conducted or of such officer as may be empowered by that government in this behalf, and unless the chit is registered in that state in accordance with the provisions of this act.
Chit fund is a kind of savings scheme practiced in india. The chit funds act, came into existence in 1982, the ministry of finance enacted the chit funds act to regulate the sector. I did good research and thought of sharing my knowled. An act to provide for the regulation of chit funds and for matters connected therewith.
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