Amended chit funds bill passed by Parliament

Amended chit funds bill passed by Parliament

Parliament on Thursday passed The Chit Funds (Amendment) Bill, 2019, which provides for raising the monetary limits for chit funds to the three-fold and hiking commission for the foreman.

The bill, which got Lok Sabha's nod on November 20, was passed in Rajya Sabha with a voice vote.

The maximum chit amount is proposed to be raised from Rs 1 lakh to Rs 3 lakh for those managed by individuals or less than four partners, and from Rs 6 lakh to Rs 18 lakh for firms with four or more partners.

The maximum commission for foreman, who is responsible for managing the chit, is proposed to be raised from 5 per cent to 7 per cent. The bill also allows the foreman a right to lien against the credit balance from subscribers.

Piloting the bill, Minister of State for Finance Anurag Thakur, said that chit funds are legal and one should understand that these are different from unregulated deposit schemes or Ponzi schemes.

The bill also proposes to allow subscribers to join the process of drawing chits through video-conferencing.

He also told the House that the bill removes the limit of Rs 100 (which was set in 1982), and allows the state governments to specify the base amount over which the provisions of the Act would apply.

The Minister also said that chit fund subscribers can opt for insurance but the government cannot make it mandatory as it would add to the cost.

He also said that the bill provides that the chit fund operator has to have secured deposit to the size of scheme, which is a sufficient safeguard for people subscribing to the scheme.