Lok Sabha passes Bill to ease compliance burden of registered chit funds

The Lok Sabha on Wednesday passed a bill that seeks to reduce the compliance burden of the registered chit funds and inserts 'fraternity fund' and 'rotating savings and credit institution' among the names, which may be used to refer to chit fund.

The Chit Funds (Amendment) Bill, 2019 was passed by a voice vote after a reply by Minister of State for Finance and Corporate Affairs Anurag Thakur, who said that the Bill was also aimed at protecting the interest of the poor.

The amendments moved by the opposition were negated. The Bill seeks to amend the Chit Funds Act, 1982 and was introduced in the last session of Parliament.

Thakur said that chit fund was not a deposit-making scheme but a subscription-based scheme and was legal unlike the unregulated schemes or Ponzi schemes.

He said that regulated funds were those that were in the purview of nine registered institutions."The chit fund is legal. It is registered and then floated," the minister added.

Dismissing opposition's criticism of demonetisation, Thakur said that direct tax collection had doubled from about Rs 6.35 lakh crore to Rs 11.38 lakh crore and the number of taxpayers had also nearly doubled.

He said the government will achieve the goal of making India a $ 5 trillion economy by 2025.

Noting that one billion transactions had been recorded under the Unified Payments Interface (UPI), he said RuPay platform was also gaining strength.

The minister said some members have said that there was not much difference between "chit fund" and "cheat fund" in West Bengal and said 'fraternity fund' and 'rotating savings and credit institution' have been added as alternate names for chit fund.

Thakur said that limits of the maximum amount of chit funds which may be collected have been enhanced to Rs 3 lakh for chits conducted by individuals and Rs 18 lakh for firms.

Referring to demands from members for GST exemption, he said the matter is to be decided by the GST council.

The minister said chit funds were in the purview of state governments but RBI has powers to monitor their functioning.

While the Act provides that a chit will be drawn in the presence of at least two subscribers, the bill allows subscribers to join via video-conferencing.