Current legal position
The Chit Funds Act, 1982 continues to govern registered chit fund business and is implemented by the State Governments. The Chit Funds (Amendment) Act, 2019 made important changes to terminology and operation of chits, including Section 13 limits, video-conference participation under Sections 16 and 17, the ceiling on foreman's commission under Section 21, and the State Government's power under Section 85.
About the Chit Funds Act, 1982
The Act was enacted to regulate chit funds and matters connected with them. A registered chit generally involves subscribers contributing periodical instalments to a common pool, with the net chit amount becoming payable to subscribers in turn in the manner provided by the chit agreement and the Act.
Section 1 - Short title, extent and commencement. This legislation is called the Chit Funds Act, 1982. Its commencement is governed by Central Government notification, with provision for different commencement dates in different States.
2019 amendment highlights: the amendment introduced or updated expressions such as "gross chit amount", "net chit amount" and "share of discount"; raised specified aggregate chit limits under Section 13; enabled recorded video-conference participation for the mandatory subscribers under Section 16 and corresponding minutes requirements under Section 17; raised the foreman commission ceiling under Section 21 to seven per cent; and amended Section 85 to allow the State Government to specify the relevant exemption amount by Gazette notification.
Chapter I Preliminary
Chapter II Registration Of Chits, Commencement And Conduct Of Chit Business
- Section 4 Prohibition of chits not sanctioned or registered under the Act
- Section 5 Prohibition of invitation for subscriptions except under certain conditions
- Section 6 Form of chit agreement
- Section 7 Filing of chit agreement
- Section 8 Minimum capital requirements for the commencement, etc., of a chit, and creation of a reserve fund, by a company
- Section 9 Commencement of chit
- Section 10 Copies of chit agreement to be given to subscribers
- Section 11 Use of words chit, chit fund, chitty, kuri, fraternity fund, or Rotating Savings and Credit Institution
- Section 12 Prohibition of transacting business other than chit business by a company
- Section 13 Aggregate amount of chits
- Section 14 Utilisation of funds
- Section 15 Alteration of chit agreement
- Section 16 Date, time and place of conducting chits
- Section 17 Minutes of proceedings
- Section 18 Copies of minutes to be filed with Registrar
- Section 19 Restriction on opening of new place of business
Chapter IIi Rights And Duties Of Foreman
Chapter IV Rights And Duties Of Non-Prized Subscribers
Chapter V Rights And Duties Of Prized Subscribers
Chapter VI Transfers
Chapter VIi Meetings Of General Body Of Subscribers
Chapter VIii Termination Of Chits
Chapter IX Inspection Of Documents
Chapter X Winding Up Of Chits
- Section 48 Circumstances under which chits may be wound up
- Section 49 Application for winding up
- Section 50 Bar to winding up proceedings
- Section 51 Commencement and effect of winding up order
- Section 52 Injunction order
- Section 53 Powers of Registrar
- Section 54 Vesting of chit assets in Registrar or other persons
- Section 55 Suits, etc., to be stayed on winding up order
- Section 56 Notification of winding up order
- Section 57 Cessation of winding up proceedings on insolvency of foreman, etc., or the winding up of the company and transfer of such proceedings
- Section 58 Award of compensation to foreman
- Section 59 Right to appeal
- Section 60 Limitation
Chapter XI Appointment Of Officers And Levy Of Fees
Chapter XIi Disputes And Arbitration
- Section 64 Disputes relating to chit business
- Section 65 Period of limitation
- Section 66 Settlement of disputes
- Section 67 Procedure for settlement of disputes and powers of Registrar or nominee
- Section 68 Attachment before judgment and other interlocutory orders
- Section 69 Decision of Registrar or nominee
- Section 70 Appeal against decision of Registrar or nominee
- Section 71 Money how recovered
- Section 72 Private transfer of property made after issue of certificate void against foreman
Chapter XIii Miscellaneous
- Section 73 Advisory role of Reserve Bank
- Section 74 Appeals
- Section 75 Powers of Registrar to give extension of time for filing documents
- Section 76 Penalties
- Section 77 Penalty for second and subsequent convictions
- Section 78 Application of fine
- Section 79 Offences by companies
- Section 80 Cognizance of offences
- Section 81 Power to compound offences
- Section 82 Power to enter and search any place and to seize any documents
- Section 83 Officers to be public servants
- Section 84 Power to delegate
- Section 85 Act not to apply to certain chits
- Section 86 Banks not to conduct chit business
- Section 87 Power to exempt
- Section 88 Protection of action taken under the Act
- Section 89 Power to make rules
- Section 90 Repeal and saving