Govt introduces bill to amend Chit Funds Act in Lok Sabha

The government on Monday introduced a bill in Lok Sabha to amend the Chit Funds Act that seeks to revise the prescribed ceiling of chit amount to Rs 3 lakh for individuals as well as to bring in various other changes.

Minister of State for Finance Anurag Thakur introduced the Chit Funds (Amendment) Bill, 2019 amid protests by Opposition parties over the Kashmir situation.

The amendments have been proposed to facilitate orderly growth of the chit fund sector, to remove bottlenecks and enable greater financial access to people, as per the bill.

With the amendments, the prescribed ceiling of aggregate chit fund amount for individuals would be raised to Rs 3 lakh from Rs 1 lakh and to Rs 18 lakh from Rs 6 lakh for firms.

Besides, words 'gross chit amount', 'share of discount' and 'net chit amount' would be substituted with 'chit amount', 'dividend' and 'prize amount', respectively, in the Act.

This would remove confusion with respect to illegal prize chits, according to the government.

Another change proposed would confer powers upon the state government concerned to specify the amount up to which any chit fund shall be exempted under the Act.

The Chit Funds Act, 1982 was enacted to provide for regulation of chit funds.

A bill in this regard was introduced in March 2018 in Lok Sabha and was referred to Department Related Parliamentary Standing Committee on Finance. The panel submitted its report in August 2018 but the bill lapsed as the term of the Lower House ended. After including some of the recommendations made by the panel, the government has again introduced the bill.