Consumer Voice - - Chit Fund -

• Weak reg­u­la­tory frame­work as the Acts do not pro­vide pun­ish­ment to un­scrupu­lous chit-fund com­pa­nies/ mem­bers

• Chit in­vest­ment gets af­fected if af­ter win­ning the chit the win­ner dis­ap­pears

• In such cases, the fore­man is forced to con­tinue to run the chit busi­ness with­out the ‘de­faulted’ con­tri­bu­tion, thereby bear­ing the loss him­self

• As a chit auc­tion is not al­ways sup­ported by a col­lat­eral, un­scrupu­lous sub­scribers get em­bold­ened to act against the spirit of the chit fund, thereby caus­ing losses

• The chances of the chit fund pro­ceeds be­ing used for money-laun­der­ing ac­tiv­i­ties are high

• Sec­tion 12 (2) of the Cen­tral Act pro­hibits car­ry­ing on any other busi­ness by the chit-fund com­pany when car­ry­ing on chit busi­ness, lim­it­ing the scope of new play­ers

• Sec­tion 13 (3) of the Cen­tral Act fixes the ag­gre­gate chits con­ducted at 10 times of the net owned funds of the chit-fund com­pany (paid-up cap­i­tal + re­serves – losses) for a chit-fund busi­ness. This lim­its the scope of growth.

• No chit-fund com­pany is giv­ing chits above ten lakh ru­pees

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