It came on the statute book as the prevention of moneylaundering act, 2002 15 of 2003. A commission has to be paid to the chit fund company. The dominant purpose of the act is to regulate the chit and control the activity of the foreman and protect the interests of the subscribers. Regarding chit fund companies resolved caclubindia. The bill also proposes to amend a section of the act to remove the ceiling of rs100 set in 1982 at the time of framing the chit funds act, which has lost its relevance, the release said. The chit funds act, 1982 was enacted to provide for the regulation of chit funds and for matters connected therewith. At this juncture, a mention on the central chit fund act, 1982 seems apt. Chit funds act, 1982 bare acts law library advocatekhoj. Credit associations pdf, williams college, archived from the original pdf. Short title, extent and commencement 1 this act may be called the chit funds act, 1982. Section 2r of the chit funds act 1982 chit funds act and the respondent was a foreman within the meaning of section 2j of the chit funds act. Even checked up the act union government chit funds act 1982 except the state of jammu and kashmir. The prevention of moneylaundering bill having been passed by both the houses of parliament received the assent of the president on 17th january, 2003. The company being registered under the companies act 1956, began its operations in 1984.
Central chit fund act chit fund companies bangalore. The prevention of moneylaundering amendment act, 2005. Under this act, the chit fund businesses can be registered and regulated only by the respective state governments. According to section 2b of the chit funds act, 1982. In the chit funds act, 1982 central act 40 of 1982 hereinafter referred to as the principal act, i section 70 shall be renumbered as subsection 1 thereof and in subsection 1 as so renumbered. To understand how the chit fund companies work, we must understand few terms which will be used during the process. Chit fund is where you can invest your money on monthly basis called installments. The law governing and regulating the business of chit fund in india is the indian chit fund act, 1982 herein after referred to as the act. The all india chit funds association is pitching for an amendment to the present chit fund act of 1982 to legalise unregistered chit funds.
The appendices to the technical guide contain the formats of financial statements of a chit fund business prescribed by the chit funds act, 1982 and an illustrative audit programme checklist which lays down the procedures that might be gainfully used by the auditor for verification of various items appearing in the financial statements of a. Be it enacted by parliament in the seventieth year of the republic of india as follows. Copies of chit agreement to be given to subscribers. Chit funds in india are governed by various state or central laws. A chit fund company is a company that manages, conducts, or supervises such a chit fund, as defined in section of the chit funds act, 1982. Schemes schemes banning act, 1978 and banning act, 1978 and the chit funds act, 1982 and the legislations enacted by the legislations enacted by the sg sg sg have have not been able to completely address the issue of unregulated the issue of unregulated deposit deposit schemes schemes run by unscrupulous run by unscrupulous elements ca.
The links i found are given below from et we know on the other hand, any profit made by the last person in the chit is taxable. A chit fund is a type of rotating savings and credit association system practiced in india. Each month, the subscribers put in their monthly installments into the pot. In exercise of the powers conferred by section 89 of the chit funds act, 1982. Government of kerala published the chit fund rules 201204062012 notification government order nog. Chit funds chit funds act 1982 often microfinance organizations. To file the chit agreement with the registrar, the foreman has to submit copy of the chit agreement. The chits funds act,1982 statement of objects and reasons 1a. Any person or company intends to carry chits business shall obtain prior sanction order p. Chit funds act 1982 section 25 liability of foreman to. For instance, the andhra pradesh chit funds act 1971 had previously required the chit managers in that state to deposit only 50% of the chit value with the registrar. I did good research and thought of sharing my knowled. Recently, while working with one of my clients, i was introduced with the concept of chit funds. One key guideline is regarding the discount that a member is willing to take on the chit.
Organised chit fund schemes are required to register with the registrar of firms, societies and chits. Prithviraj i checked up various sources but could not come to conclusion. Major head 3475 3475 other general economic services major head 3475 00 200 regulation of other business undertakings minor head 3475 00 200 97 enforcement of chit funds act, 1982 in delhi sub head 97 00 01 salaries 11474 5290 97 00 06 medical treatment 500 200 97 00 11 domestic travel expenses 10 10. A chit is defined under the act as a transaction whether called chit, chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specified number of individual that every one of them will subscribe to a certain sum of money or. Be it enacted by parliament in the thirtythird year of the republic of india as follows. Chit funds in india are governed by the chit funds act, 1982. Chit fund act1982 is a central act to provide for the regulations of the chits fund business and for the matters related thereon. Foreman of chit fund shall have the same meaning as is assigned to the term foreman in clause j of section 2 of the chit funds act, 1982. However, the state acts may override certain provisions as deemed necessary. Under the chit fund act of 1962, businesses can be registered and regulated only by the respective state governments. In this act, unless the context otherwise require, aapproved bank means the state bank of india constituted under section 3 of the state bank of india act, 1955 23 of 1955, or a subsidiary bank constituted under section 3 of the state bank of india subsidiary banks act, 1959 33 of 1959, or a corresponding new bank constituted under section 3 of. An act to provide for the regulation of chit funds and for matters connected there with. The act says that the prize money, net of the foremans commission, cant be less than 60% of the total value of the chit. Recession was a blessing in disguise for chit funds, when many small businesses started borrowing from chit funds at.
It extends to the whole of india except the state of jammu and kashmir. At present chit funds are governed by chit funds act of 1962, rbi act of 1934, and sebi act of 1992 etc. All branches and offices in singapore of the company shall be deemed to be. Which investment is better, a mutual fund or a chit fund. I was aware of sarada chit fund scam but not completely aware of working behind the chit fund. Foreman to allow certain subscribers to inspect chit records. The business in india is regulated under the chit fund act, 1982. The chit funds act, 1982, is within the leigislative competence of the parliament. Appointment of authorities under chit fund act, 1982. Notification under chit funds act, 1982appointments.
The chit funds act 1982 indian bare acts india bare act. Chit funds chitty kuri miscellaneous nonbanking company. The chit funds act 1982 in india bare acts, banking and insurance, business and corporate, constitutional, consumer laws, criminal law, energy, environmental, family and inheritance, heritage and national importance, immigration law, labor law, the chit funds act 1982 national security, others, procedural and administration, property related, public utilities, shipping laws, tax laws. For example, let us consider chitvalue10lakhs chit.
As per section 2 b of the chit funds act 1982, chit means a transaction whether called chit, chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money or a certain quantity of grain instead by way of. Provided further that before chit funds act 1982 to register a chit under the first proviso, the foreman shall be given a reasonable opportunity of sct heard. In exercise of the powers conferred by the section 89 of the chit funds act, 1982 central act, 40 of 1982, and in supersession of the tripura chit fund rules 1987. The chit funds act 1982 lays down some important ground rules for chit funds. In terms of subsection4 of section 8 of the chit funds act, 1982 central. In india, the chit funds are governed regulated by.
The money is collected from the chit group and is put up for auction every month. Icai the institute of chartered accountants of india. Due to the rigid provisions of the 1975 kerala chitties act, many fund. Under the act chit fund act department of goods and. Pdf on jun 1, 2002, james manalel and others published chit. The investor who bids the lowest for the total sum will win the lot. Let us understand how the chit fund companies or the committee works and will then proceed to how the company is registered in terms of chit fund act, 1982. It is also trying to work on an insurance mechanism to protect the investors. A savingscumloan scheme in which a number of contributors come together to invest a fixed sum every month.
A project report on cutomer attitude towards investing in. Delegation of powers to compound offences under chit fund act, 1982. It shall come into force on such date as the central government may, by notification in the official gazette, appoint, and different dates may be appointed for different states. Organised chit fund schemes are required to register with the registrar or firms, societies and chits. It was alleged by the respondent, that the petitioner in his agreement of guarantee dated august 2012 guarantee in favour. An act to provide for the regulation of chit funds and for matters connected therewith. Subsection 3 of section 1 of the act, inter alia, confers powers upon the central government to appoint different dates for commencement of the said act for different states. I am not an expert when it comes to mutual funds, but i can help u understand everything about chitfund. The constitutional validity of the chit funds act, 1982 act no. An act to provide for the regulation of chit funds and for matters connected therewith be it enacted by parliament in the thirtythird year of the republic of india as follows chapter 1 preliminary. Regulator of chit funds is the registrar of chits appointed by respective state governments under section 61 of chit funds act.
409 959 1020 542 1280 680 257 1446 248 724 1469 90 1029 651 1034 188 668 112 1321 530 335 1322 527 227 1270 1126 26 1480