The Congress on Tuesday demanded that a bill which seeks to facilitate orderly growth of the chit fund sector be referred to a select committee of the Rajya Sabha to review suggestions made by a parliamentary panel.
The Chit Funds (Amendment) Bill, 2019, seeks to remove bottlenecks and give greater financial access to people.
"The Parliamentary Standing Committee on Finance's recommendations have not been mentioned here. You have not given us the committee's report. You have good intention. Can you not send this Bill to a select committee to review the report (suggestions) of the standing committee," Congress member P Bhattacharya said.
The Bill seeks to amend the Chit Funds Act, 1982, which regulates chit funds and prohibits a fund from being created without the prior sanction of a state government.
The Chit Funds (Amendment) Bill, 2019, which was passed by the Lok Sabha earlier this month, was moved for consideration and passage by Union Minister of State for Finance Anurag Thakur.
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He urged the members of the Upper House to pass the Bill, saying this does not mix ponzi schemes and unregulated chit funds with regulated chit funds.
Some MPs highlighted that there was a lack of clarity on the Bill and also sought stringent punishments for violators of the chit fund law.
Nominated member Narendra Jadhav said the penalty of two years imprisonment and Rs 5,000 fine is inadequate under the law which needs to be enhanced.
Supporting the Bill, he suggested that there is a need for penalty for individuals and companies duping people --investors or subscribers of chit funds.
TMC leader Manish Gupta also supported the Bill, but said a legislation to deal with the problem must be deep rooted.
He also highlighted infirmity of the State Bank of India, the Reserve Bank of India and the Securities and Exchange Board of India in regulating chit funds in the country and said multiple agencies are operating to deal with the sector.
K Gokulkrishnan of the AIADMK, who supported the Bill, said small players should be exempted from the Bill and the 12 per cent Good and Services Tax should not be imposed on them.
He said small players should not be subjected to regulation under the law.
Samajwadi Party's Ravi Prakash Verma said the transactions of the chit fund schemes should be done through the banking system. He supported the Bill.
BJD's Amar Patnaik said,"An integrated approach in the Bill is not there. There was a lack of regulatory control and investors awareness (which led to frauds)."
The capital adequacy norms should be increased (to insulate investors), he said.
The changes in the proposed Bill are cosmetic and have not gone to the root of the problem, Patnaik said, seeking much more stringent provisions in the law to regulate chit funds in the country.
Ram Nath Thakur of the JD(U) also supported the bill and asked the government to expedite the 166 chit fund fraud cases with the Central Bureau of Investigation (CBI).
BJP member Anil Jain also participated in the debate.
Under the legislation, the prescribed ceiling of aggregate chit fund amount for individuals has been raised from Rs 1 lakh to Rs 3 lakh and in case of firms, the limit has been raised from Rs 6 lakh to Rs 18 lakh.
Besides, terms such as chit amount, dividend amount and prize amount have been substituted with terms gross chit amount, the share of discount and net chit amount.
The legislation also increases the maximum commission of a foreman from five per cent to seven per cent and also allows the foreman a right to lien against the credit balance from subscribers.
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