The Lok Sabha on Wednesday unanimously passed a Bill that aims at putting in place a mechanism to ensure transparency in chit fund schemes, protect subscribers and regulate the industry.
To facilitate orderly growth of the chit fund sector, Minister of State for Finance and Corporate Affairs Anurag Thakur said through the Chit Fund (Amendment) Bill, 2019 the government was making changes in the rules for starting a chit fund, which earned a negative image in the recent past.
The Minister had moved the Bill, which seeks to amend the Chit Funds Act, 1982, on Monday.
With the amendments, the prescribed ceiling of aggregate chit fund amount for individuals would be raised to Rs 3 lakh from Rs 1 lakh, and Rs 18 lakh from Rs 6 lakh for firms. Besides, words 'gross chit amount', 'share of discount' and 'net chit amount' would be substituted with 'chit amount', 'dividend' and 'prize amount', respectively, in the Act.
The amended Act would confer powers upon the state governments to specify the amount up to which any chit fund shall be exempted under the Act.
Various amendments have been proposed to remove bottlenecks and enable greater financial access to people.
Thakur had introduced the Bill during the Budget session in August and it was referred to Standing Committee.
Earlier, the government had introduced a Bill to regulate the chit fund industry in 2018, but it lapsed.
The parliamentary panel had suggested the government to incorporate elements of insurance coverage for subscribers. It also noted mobilising short-term funds to meet various personal needs had been a chronic problem, faced by the people in developing countries like India.