The Bill approved the raising of the maximum chit amount from Rs 1 lakh to Rs 3 lakh for those managed by individuals or less than four partners, and from Rs 6 lakh to Rs 18 lakh for firms with four or more partners.
Minister of State for Finance Anurag Thakur, who was piloting the bill, said that chit funds are legal and should not be confused with unregulated deposit schemes or Ponzi schemes in which numerous people have lost their money.
The bill introduces words such as ‘fraternity fund’, ‘rotating savings’ and ‘credit institution’ to make chit funds more respectable. The maximum commission for the ‘foreman’, who is responsible for managing the chit, is proposed to be raised from 5% to 7% and allows him a right to lien against the credit balance from subscribers.
The bill further recommends that subscribers be allowed to join the process of drawing chits through videoconferencing. It also removes the cap of Rs 100 and permits the state governments to stipulate the base amount over which the provisions of the Act would apply, the Minister said.
Participating in the debate, several BJP members praised the government’s step, saying this will help protect the money of the economically weaker section.
Recalling the many initiatives regarding the economy and financial inclusion undertaken by the NDA government, MoS Thakur stated that India will become a US $5 trillion economy by 2024.