The Chit Funds (Amendment) Bill, 2019

The saving cum borrowing scheme has geared up to face the century after going through shedload hustles in the standing committee and crossing parliamentary scrutiny. The Chit Funds (Amendment) Bill which pended in the legislation was passed by the Lok Sabha on 20.11.2019, yesterday. The Bill, 2019 amends the Chit Funds Act, 1982. The new Bill barricades the perimeters of rotational credit service for efficient use and curbs exploitation by cheat funders. 

Chit funds are smart phones of  above-average/middle- income groups, the metaphor stresses its necessity. We know what a ‘Chit Fund’ is but what we actually ought to know is  the ceiling amount and the substitution of words as proposed in the Amendment Bill,2019. Section 1(2) of the Act has been removed, which talks about the extent of the same. We now know that it extends to whole of India.  There is loads of change in Section 2 of the Act in particular to the substitution of words.  The words “fraternity fund, Rotating Savings and Credit Institution” are inserted after  the word “kuri”. Clauses (d) (h) (m) of section 2 are omitted and clauses (ja) (jb) are inserted and so the words “gross chit amount” and “net chit amount” accordingly in place of “chit amount” and “prize amount”. Clause (pa) is inserted to replace the word “dividend” with “share of discount”.  Section 4 of the Bill will be substituted for Section 11 of the Act which talks about the one year time period. Section 5 of the Bill will come in plce of Section 13 of the Act and here it is about the ceiling amount from one lakh to three lakhs in the case of individuals and 6 laks to 18 lakhs in the case of firms. Section 6 of the Bill will add the words “present in person or through video conferencing duly recorded by the foreman” after the words “two subscribers” in Section 16of the Act. Section 7 of the Bill goes parallel with this techie world and adds the followings words “at least two other subscribers who are present in person or through video conferencing” to Section 17 of the Act, proviso is included. Section 8 of the Bill increases the percentage from 5 to 7 in Section 21 of the Act and omits the word “and” and the following are added “to exercise his right to lien against the credit balance in other non-prized chits”. The final amendment is with regards to Section 85 of the Act. Section 9 of the Bill comes in its place and substitutes the following “such amount as may be specified, by notification in the Official Gazette, by the State Government” instead of “one hundred rupees”. The proposed Amendment is a guaranteed lamp to dovetail funds to derail financial crisis.

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