Chit Law
CHAPTER I
Preliminary
- Title, Scope, and Implementation
- Key Terminology
- Supremacy of the Act
CHAPTER II
CHIT Registration, Initiation, and Management of Business Sections
Sections
- The Act forbids the use of chits that are not authorized or registered.
- invitations to subscriptions are prohibited unless specific circumstances are met.
- type of chit contract.
- the chit agreement’s filing.
- Minimum capital needed by a corporation to establish a reserve fund and start, among other things.
- Start of the chit.
- Chit agreement copies will be distributed to subscribers.
- Using terms like “chit,” “chit fund,” “chitty,” or “kuri.”
- prohibiting a firm from conducting business other than chit business.
- Total number of chits.
- use of financial resources.
- modification of the chit deal.
- The day, time, and location of the chits session.
- records of the meetings.
- Minutes copies must be sent to the Registrar.
- Limitation on the launch of new
CHAPTER III
Rights and Responsibilities of Foreman
Sections
- The foreman will provide security.
- Foreman’s rights.
- Responsibilities of a foreman.
- Records, books, etc., are the foreman’s property.
- sheet of balances.
- Foreman’s responsibility to subscribers.
- The foreman has withdrawn.
CHAPTER IV
Rights and Duties of Non-Prized Subscribers
Sections
- Non-prized subscribers to receive receipts and pay for their subscriptions.
- Removal of subscribers who have fallen behind.
- replacement of subscribers.
- Amounts owed by subscribers who have fallen behind.
CHAPTER V
Prized Subscribers Rights and Duties
- A valued subscriber will provide security. Rewarding subscriber who consistently pays subscription fees. The foreman will send formal notices requesting subsequent subscriptions.
CHAPTER VI
Transfers
- limitations on the foreman’s right transfer. Transfer of the non-prized subscriber’s authoring rights. Transfer acknowledged by the foreman. The transferee’s name is entered into the books.
CHAPTER VII
Termination of Chits
- Allowance for carrying over chits under specific circumstances. Chit termination. A copy of the consent or assent should be given to the registrar. reimbursement for subscriptions from non-prized users. The initial charge on chit assets shall be the subscribers’ dues.
CHAPTER VIII
Examining the Documents
- The foreman will permit specific subscribers to review the chit records. Chit records are kept safe by the foreman. The Registrar examines the chit books and records. The Reserve Bank’s authority to review chit books and documents.
CHAPTER IX
Winding up of Chits
- Conditions that can lead to chits being wound up. Application for closing out. Bar to conclude the event. Start and outcome of the winding down order. order of injunction. Registrar’s Authority. chit assets vesting in the registrar or other individuals. Cases, etc., to be postponed until the end of the order. notification of the order’s winding down. termination of the company’s winding up and transfer of the winding up procedures pertaining to the foreman’s insolvency, etc. Compensation awarded to the foreman. the ability to appeal. Restraint.
CHAPTER X
Appointment of Officers and Levy of Fees
- The Registrar and other officers are appointed. Document inspection at the registrar’s office. charging of fees.
CHAPTER XI
Disputes and Arbitration
- disagreements about chit business. Time frame for the constraint. Resolution of conflicts. Process for resolving conflicts and Registrar’s or nominee’s authority. attachment prior to verdict and additional interlocutory directives. Registrar’s or nominee’s decision. Appeal a Registrar’s or nominee’s decision. How much money was recovered. Property transfers undertaken privately after a certificate is issued are void against the foreman.
CHAPTER XII
Miscellaneous
- The Reserve Bank’s advisory role. Appealing. Registrar’s authority to provide a deadline extension for document submission. Fines. Penalty for convictions that happen again and again. Imposition of a fine. company offenses. awareness of transgressions. the ability to compound offenses. authority to enter, search, and seize any location and document. Officers will work for the government. authority to assign. Act to be applied just to specific chits. Banks should refrain from dealing in chits. authority to exempt. safeguarding legal action under the Act. authority to impose regulations. Save and repeal.
Annexure II
Highlights of Sathyanidhi Chit Fund
| The Chit Funds Act,1982 | The Chit Funds (Amendment) Bill,2018 |
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Section 2(b) “chit” means a transaction whether called chit, chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical instalments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction of by tender or in such other manner as
may be specified in the chit agreement, be entitled to the prize amount. |
In the Chit Funds Act, 1982 (hereinafter referred to as the “principal Act”), in section 2, in clause (b), after the word “kuri”, the words, “fraternity fund” shall be inserted. |
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Section 11 (1) No person shall carry on chit business unless he uses as part of his name any of the words “chit”, “chit fund”, “chitty” or “kuri” and no person other than a person
carrying on chit business shall use as part of his name any such word. |
11. (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” or “fraternity fund” and no person other than a
person carrying on chit business shall use as part of his name any such word. |
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section 16. (2) Every such draw shall be conducted in accordance with the provisions of the chit agreement and in the presence of not less than two subscribers |
In section 16 of the principal Act, in sub- section (2), after the words “two subscribers”, the words “present in person
or through video conferencing duly recorded by the foreman” shall be inserted. |
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Section 21. (b) to such amount not exceeding
five per cent. of the chit amount as may be
fixed in the chit agreement, by way of
commission, remuneration or for meeting the expenses of running the chit; |
(i) in clause (b), for the words “five per cent.”, the words “seven per cent.” shall be substituted; |
THE CHIT FUNDS ACT, 1982
ACT NO. 40 OF 1982
THE CHIT FUNDS AMENDMENT ACT 2019
THE CHIT FUNDS ACT, 1984
ACT NO. 40 OF 1984