The Chit Funds (Amendment) Act, 2019

Dec 09, 2019 | by Avantis RegTech Legal Research Team

Finance & Taxation Compliance

The Ministry of Law and Justice on December 05, 2019, notifies the Chit Funds (Amendment) Act, 2019 to further amend the Chit Funds Act, 1982.

The followings are the amendments made in the Chit Funds Act, 1982:-

Ø  Section 2(ja), (jb) and (pa) have been newly inserted, namely:-

Section 2(ja):-“gross chit amount” means the sum-total of the subscriptions payable by all the subscribers for any installment of a chit without any deduction of discount or otherwise.

Section 2(jb):-“net chit amount” means the difference between the gross chit amount and the discount, and in the case of a fraction of a ticket means the difference between the gross chit amount and the discount proportionate to the fraction of the ticket, and when the net chit amount is payable otherwise than in cash, the value of the net chit amount shall be the value at the time when it becomes payable

Section 2(pa):-“share of discount” means the share of the subscriber in the amount of discount available under the chit agreement for rateable distribution among the subscribers at each installment of the chit.

Ø  Section 11 related to “Use of the words ‘chit’, ‘chit fund’, ‘chitty’ or ‘kuri’, ‘fraternity fund’ or ‘Rotating Savings and Credit Institution’ has been substituted, namely:-

“(1) No person shall carry on chit business unless he uses as part of his name any of the words “chit”, “chit fund”, “chitty”, “kuri”, “fraternity fund” or “Rotating Savings and Credit Institution” and no person other than a person carrying on chit business shall use as part of his name any such word.

(2) Where at the commencement of this Act,—

a)      any person is carrying on chit business without using as part of his name any of the words specified in sub-section (1); or

b)      any person not carrying on chit business is using any such word as part of his name,

he shall, within a period of one year from such commencement, add as part of his name any such word or, as the case may be, delete such word from his name:

Provided that the State Government may, if it considers necessary in the public interest or for avoiding any hardship, extend the said period of one year by such further period or periods not exceeding one year in the aggregate.”

Ø  Section 13 has been substituted related to aggregate amount of chits.

Ø  Section 17 related to “Minutes of proceedings”, a proviso has been inserted, namely:-

“Provided that where two subscribers required to be present under sub-section (2) of section 16 are present through video conferencing, the foreman shall have the minutes of the proceedings signed by such subscribers within a period of two days of the date of the draw.”

Ø  Section 21(fa) has been inserted, namely:-

“to exercise his right to lien against the credit balance in other non-prized chits;"


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