The bill allows state governments to prescribe this ceiling and to increase it from time to time.At present, all chits with aggregate amount Rs 100 and below are exempted from provisions and penalties of the Act.The draft Bill gives them more freedom to regulate such funds. Currently enforcement remains the primary responsibility of the state government.
#CHIT FUNDS ACT FREE#
State Government- Chit funds fall in the Concurrent List and states are free to issue their own law.It is also changing the 1982 law to allow e-auction of chit funds.The bill proposes to allow the two minimum required subscribers at any chit auction to join through “ duly recorded video presence”.Technology - Currently the act requires at least two subscribers to be physically present at the auction.This will signify its inherent nature of being a borrowing and saving scheme, and not one that just takes deposits.The new “fraternity fund” nomenclature will distinguish its working from prize chits or marketing schemes that are barred under the Prize Chits and Money Circulation Schemes (Banning) Act.Definitions of the Act are being tightened to replace chits with “fraternity fund”.Following the Rose Valley and Saradha scam related arrests the Finance Ministry moved a Cabinet note to introduce the Chit Funds (Amendment) Bill.But companies have come under the scanner for luring small savers from rural areas under the garb of chit subscriptions.Under the law, chit funds cannot accept deposits and cannot offer other financial products or services.Non-registered chit fund are estimated to be 100 times the size of those registered.
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