Bill to amend chit funds act introduced in Lok Sabha

In a move to protect the savings of low-income households, the government on Monday introduced chit funds (Amendment) bill in the Lok Sabha.

The bill provides for allowing the mandatory presence of two subscribers either in person or through video conferencing duly recorded by the foreman, while the bids are being opened.

The Chit Funds (Amendment) Bill, 2018 seeks to facilitate the orderly growth of the chit funds sector and remove bottlenecks being faced by the chit funds industry, thereby enabling greater financial access of people to other financial products.

While retaining the requirement of a minimum of two subscribers for the conduct of the draw of the chit and for the preparation of the minutes of the proceedings, the bill proposes to allow the two minimum required subscribers to join through video conferencing duly recorded by the foreman, as physical presence of the subscribers towards the final stages of a chit may not be forthcoming easily.

The foreman shall have the minutes of the proceedings signed by such subscribers within a period of two days following the proceedings. It also provides for increasing of ceiling of foreman's commission from 5% to 7%. The rate has remained static since the commencement of the Act while overheads and other costs have increased manifold, it said.

The Chit Funds Act provides for the regulation of chit funds which are indigenous business in India and have conventionally satisfied the financial needs of low-income households.