The Union Cabinet, chaired by the Prime Minister Shri Narendra
Modi, has given its approval to introduce the Chit Funds (Amendment) Bill, 2018
in Parliament. In order to facilitate 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, the following
amendments to the Chit Funds Act, 1982 have been proposed:
a)
Use of the words "Fraternity Fund" for chit business
under Sections 2(b) and 11(1) of the Chit Funds Act, 1982, to signify its
inherent nature, and distinguish its working from "Prize Chits" which
are banned under a separate legislation;
b)
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 Chit Funds (Amendment) Bill, 2018 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;
c)
Increasing the ceiling of foreman's commission from a maximum of
5% to 7%, as the rate has remained static since the commencement of the Act
while overheads and other costs have increased manifold;
d)
Allowing the foreman a right to lien for the dues from
subscribers, so that set-off is allowed by the Chit company for subscribers who
have already drawn funds, so as to discourage default by them; and
e)
Amending Section 85 (b) of the Chit Funds Act, 1982 to remove
the ceiling of one hundred rupees set in 1982 at the time of framing the Chit
Funds Act, which has lost its relevance. The State Governments are proposed to
be allowed to prescribe the ceiling and to increase it from time to time.
Source: Govt of India
Press Release
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