The Act

Consumer Voice - - Bfsi -

In 1982, the min­istry of fi­nance en­acted the Cen­tral Chit Funds Act to reg­u­late the sec­tor. Un­der the Act, the cen­tral govern­ment chose to no­tify the Act in dif­fer­ent states on dif­fer­ent dates. States are re­spon­si­ble for no­ti­fy­ing rules and have the power to ex­empt cer­tain chit funds from the pro­vi­sions of the Act. In 2012 the cen­tral govern­ment no­ti­fied the Act in Arunachal Pradesh, Gu­jarat, Haryana, Ker­ala and Na­ga­land.

Un­der the Cen­tral Act, all chit funds re­quire pre­vi­ous sanc­tion from the state govern­ment. The cap­i­tal re­quire­ment for es­tab­lish­ing chit funds is one lakh ru­pees and at least 10 per cent of prof­its should be trans­ferred to a re­serve fund. The amount of dis­count (that is, the bid) is capped at 40 per cent of the to­tal chit fund value. States may ap­point a regis­trar who will be re­spon­si­ble for reg­u­la­tion, in­spec­tion and dis­pute set­tle­ment in the sec­tor. Any griev­ances over de­ci­sions made by the regis­trar can be sub­ject to ap­peals di­rected to the state govern­ment.

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