Chit Funds Amendment Bill, 2019

Introduced and passed in Lok Sabha on August 5, 2019 chit funds amendment act helped regulate and reshape the chit fund culture in India. Last decade, India witnessed the worst phase in Scams through chit funds, no poor or rich people were discriminated against, and everyone got scammed. There were many objectives in the bill, but one of the most critical Objectives of the Chit Funds Amendment Bill was that now no private authority would be permitted to operate a chit fund without the permission and supervision of the government. Increasing Scams was the most important reason for the Need for the Chit Funds Amendment Bill.

Chit Fund Amendment Bill Overview

Let us have a simple analogy; in your group of 12 people, everyone gives a monthly payment of a certain amount. After the desired amount is completed, a person who asked first for the amount will get that, you or anyone else. Numerous chit funds opened to not only do the mentioned system but assure people to double their money too, which caused people to bleed money into the process and in the end, they got doomed. So there was a great need for the chit funds amendment bill to save people from the chit fund frauds.

There were numerous Salient Features of the Chit Funds Amendment Bill. Still, one of the most important objectives of the chit funds amendment bill was that after the bill passed, it suddenly instructed all the companies under this chit fund scheme to be under state government strict supervision. 

Necessary Regulations in Chit Fund Amendment Bill

Many salient features of the Chit fund amendment bill comforted and helped the poor class already dealing with these schemes and funds to get what they deserve without fear of companies scamming them. 

Most essential regulations in the Chit funds amendment act:

1. Chit amount will be called the “Gross chit amount.” 
2. The final amount to be given to a person who was previously called as “prize amount” will now be called as “net chit amount.”
3. Limit of rupees according to the number of people was increased.
4. Commission of the forepersons was limited to 5% but now was increased to 7%.
5. Only provided name should be given to a chit fund.

Objectives of the Chit Fund Amendment Bill

Objectives of the Chit fund amendment bill mainly favoured the users, but the commission of the supervisors was increased too. Essential objectives of the chit fund amendment bill are:

1. Stop scams happening to the poor class by fraud companies insuring more than a conditional amount and then scamming the poor class. 
2. Most people were poor in the chit fund scheme because chit funds acted as a saving and extra income method. Hence, supervisors used to do the final amount frauds, which were restricted by the inclusion of the state government and instruction that two people should be present while drawing the final amount.
3. To facilitate and minimise supervisors’ scams by increasing his commission legally.
4. To seize unauthorised companies insuring more than net chit amount and scamming afterwards.
5. They are increasing more clarity and transparency of the net chit amount withdrawal by instructing to keep at least two subscribers through video conferencing during the withdrawal of the chit.

These objectives of the chit fund amendment bill are to help everyone who has subscribed to any chit fund scheme without being sleepless in fear of losing his or her money. Still, citizens have their duty to do a little research on the background of the individual or facility proving the scheme.

  After-effects of the implementation of the act

Because of the great objectives of the Chit fund amendment bill set by the government, there was an adverse increase in the scams across India in chit funds. Supervisors were getting more commission, so they did not need to do any fraud. One of the many salient features of the chit funds amendment act was that it increased the limit per user and per firm, which also affected the net final amount and commission, a win-win situation for both the groups.

Conclusion

Frauds in the country affect its economy, its money flow, and the people involved in it the most. The government of India introduced some of the essential regulations needed to streamline the chit fund process by keeping positive objectives of the chit funds amendment bill. Unfortunately, scamming the poor segment of our country has always been an easy job for the frauds because they violate the vulnerability of the people to get extra savings and money to fulfil their essential needs. But with the help of the chit funds amendment act, scams and frauds stopped, and every citizen of India benefitted.