Proposed Amendments In The Chit Fund Act, 1982

The Union Cabinet has given its approval to introduce the Chit Funds (Amendment) Bill, 2018 (hereinafter referred to as "Bill") in Parliament wherein the following amendments to the Chit Funds Act, 1982 (hereinafter referred to as "Act") have been proposed¹.

Use of the word Fraternity Fund

A chit is defined under the Act as a transaction 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 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 or in such other manner as may be specified in the chit agreement, be entitled to the prize amount.² However, the proposed amendment mentions the use of the term "Fraternity Fund" to signify its inherent nature and distinguish its working from "Prize Chits" which are banned under The Prize Chits And Money Circulation Schemes (Banning) Act, 1978.