Lok Sabha passes Bill to amend Chit Funds Act

The Lok Sabha on Wednesday passed the Chit Funds (Amendment) Bill, 2019 which aims at putting in place a mechanism to ensure transparency in chit fund schemes and protect subscribers.

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 legislation raises the prescribed ceiling of aggregate chit fund amount for individuals to Rs 3 lakh from the current Rs 1 lakh. In the case of firms, the limit has been raised to Rs 18 lakh from Rs 6 lakh.

Terms such as 'gross chit amount', 'share of discount' and 'net chit amount' have been substituted with 'chit amount', 'dividend' and 'prize amount' in the Act, respectively, IANS reported.

The Centre has brought the bill in the wake of a number of recent chit fund scams in which thousands of subscribers have lost their investments.

Replying to the debate on the bill in the Lok Sabha, Minister of State (MoS) for Finance Anurag Thakur said the bill has been brought with an intention of protecting the interests of investors belonging to the poor and marginalized section of the society.

The government also wants that the invested money should be returned on time to those investors who have been cheated in such schemes, Thakur said. 

The minister said the government has also conducted financial literacy programmes in different parts of the country to create awareness among the people for such schemes.