The Congress on Tuesday demanded that the Chit Funds (Amendment) Bill, 2019 be referred to a select committee of Rajya Sabha.

The Bill to amend the Chit Funds Act, 1982 seeks to facilitate the orderly growth of chit fund sector to remove bottlenecks and enable greater financial access to people.

The Bill has been passed by Lok Sabha earlier this month.

It was moved in Rajya Sabha for its consideration and passage by Minister of State for Finance Anurag Thakur. He urged the members to pass Bill, saying it does not mix Ponzi schemes and unregulated chit funds with regulated chit funds.

Congress member P Bhattacharya said, "The parliamentary standing committee on fiance's recommendations has not been mentioned here. You have not given us the committee report. You have good intention. Can you not send this bill to a select committee to review the report (suggestions) of the parliamentary standing committee."

Some members also highlighted a lack of clarity on the Bill and sought stringent punishments for violators.

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 also suggested that there is a need for a penalty for individuals and companies duping people.

TMC leader Manish Gupta also supported the Bill but said that legislation to deal with the problem must be deep-rooted.

He also highlighted the inability of RBI and SEBI in regulating chit funds in the country, saying multiple agencies are operating in the country to deal with the sector.

Supporting the Bill, K Gokulkrishnan of the AIADMK said small players should be exempted from the Bill.

He said that small players should not be subject to regulation under the law.

Supporting the Bill, Ravi Prakash Verma said that the transactions of the chit fund schemes should be done through the banking system.

Amar Patnaik of the BJD said, "An integrated approach is not there in the bill. There was a lack of regulatory control and investors awareness (which led to frauds)."

He demanded that the capital adequacy norms should be increased to insulate investors.

He said that the changes in the proposed Bill are cosmetic and have not gone to the root of the problem and sought to bring much more stringent provisions in the law to regulate chit funds in the country.

Ram Nath Thakur of the JDU supported the Bill and asked the government to expedite the 166 chit fund fraud cases pending with the 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 one lakh rupees to three lakh rupees and in case of firms, the limit has been raised from 6 lakh to 18 lakh rupees.

Besides, words chit amount, dividend 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.

KK Ragesh of CPI (M) sought some changes in the Bill.

P Wilson of DMK too suggested some changes as it has some discrepancies. There is no insurance and safety to the subscribers in case of large of the scheme.

P Vijaysai Reddy of YSRCP that the new act has defined the chit fund and prize amount and it would be easier for the people to understand and easier for courts to prosecute.

Narian Das Gupta (AAP) supported the Bill, but said the provision increasing the chit amount 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, should be left for the respective state governments to decide.

G C Chandrasekhar of the Congress said that there are around 15,000 chit fund companies and their 60 per cent customers are from rural areas.

The reason for their growth is a poor baking system in rural areas.

He also suggested that there should be stringent action against the defaulters.