Title: Discussion on the Chit Funds (Amendment) Bill, 2000 (Bill passed).
THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI BALASAHEB VIKHE PATIL): Sir, on behalf of Shri Yashwant Sinha, I beg to move :
” That the Bill to amend the Chit Funds Act, 1982, as passed by Rajya Sabha, be taken into consideration.”The Chit Funds Act, l982 was enacted as a Central Act for ensuring uniformity in the provisions applicable to the Chit Institutions throughout the country, providing for certain built-in operational safeguards for Chit operations and for protecting the interests of the Chit subscribers. Chit Fund is basically an arrangement to promote savings and their utilisation for mutual benefit of the members of the Chit. The State Governments, in consultation with the Reserve Bank of India, make rules under the Act, which is administered by the officials and authorities of the State Government concerned. The Act has so far been extended to l6 States and six Union Territories.
The Constitutional validity of the Act and its various provisions were challenged in various courts. The Supreme Court in its judgement dated the l3th July, l993, upheld the Constitutional validity of the Act and inter alia commented that the appropriate authorities, in case the demand is so raised from time to time, increase the limits of aggregate amounts of chits under Section l3 of the Act. Keeping in view the comments and suggestions received from some of the State Governments, the All India Association of Chit Funds and the observations of the Supreme Court, the following amendments to the Chit Fund Act, l982 are being proposed.
Sub-Section 3 of Section 6 of the Act provides for maximum amount of discount not to exceed 30 per cent of the chit amount, which the prized subscriber has to forego. It is proposed to enhance the ceiling of discount from the existing 30 per cent to 40 per cent.
Section l3 of the Act prescribes limits of aggregate chit amount for different types of foremen. Keeping in view the observation of the Supreme Court, it is proposed to increase the limit of aggregate chit amount for individual foremen from Rs.25,000/- to Rs.l,00,000/- and in the case of partnership and association of individuals from Rs. 1,00,000 to Rs.l,00,000/- per partner subject to ceiling of Rs.6,00,000/-.
Section 20 of the Act provides for every foreman to deposit an amount equal to the chit amount in the name of the registrar in an approved bank for obtaining permission and operating and conducting the chit. It is proposed that the amount which the foreman has to deposit with the Registrar can be deposited to the extent of 50 per cent in cash and balance 50 per cent in the form of a bank guarantee.
This Bill has been passed by the Rajya Sabha without any modifications. I request this august House also to kindly consider and pass this Bill.
MR. CHAIRMAN : Motion moved :
” That the Bill to amend the Chit Funds Act, l982, as passed by Rajya Sabha, be taken into consideration.”
SHRI A.C. JOS (TRICHUR): Thank you for calling me. I am in general agreement with this Bill, because you know that I come from Kerala and Kerala is a real breeding ground for chit funds and the maximum number of chit funds are being run in Kerala. There are a number of chit funds running freely and this has been illustrated in my State. And that is why, generally, I welcome the amendments suggested by the hon. Minister.
A chit fund, as such assumes more importance now because of the reduction of the interest and clamouring by the different industries for the reduction of the bank rates. The savings in the deposits in the banks will go down. So, at the village level small level savings can be encouraged through chit funds. So, my request to the Government is this relaxation is very good, especially the amendment No.2 to Section 6 and the amendments to Section l3 and Section 20. They will facilitate well and encourage chit funds to come in.
My request is that the Government should see that there shall not be any harassment of the foremen of the small chit fundsby the officers. The foremen at the village level are rather running them but because of the coming into force of the Act, advent of the Act after the passing of the of the Act, the Government officers are running into problems.
The State Governments are doing it. But my suggestion to the hon. Minister is that the Central Government as well as the State Governments should encourage chit funds. The day is coming — it is not far-off– when the deposits in the banks will go down if the interest rates are reduced. It is the demand of the industry.
Sir, earlier, the health of our nation used to be in the hands of the small-scale industries. We had a savings rate increased from 22 to 24 per cent. My apprehension is, if the bank rates are lowered, then savings will go down. So, we have to encourage these sorts of small savings. So, I would request the hon. Minister to take more steps so that chit funds can be encouraged.
Sir, in general, I appreciate this amendment and, once again, request the hon. Minister to bring forward a more comprehensive Bill which will encourage chit funds in the future.
(बेतिया):सभापति महोदय, चिट फंड (संशोधन) विधेयक, २००० के इस संशोधन में सरकार जो प्रस्ताव लाई है- धारा छ: में, धारा १३ और धारा २० में, वह स्वागत योग्य है। चिट फंड विशेषकर दक्षिण भारत में सबसे अघिक प्रचलित है और सबसे अघिक वहां हो रहा है। मेरे राज्य बिहार में चिट फंड की कोई ऐसी व्यवस्था नहीं है। यह एक तरह का कोआपरेटिव सिस्टम है। उसमें चिट फंड के द्वारा लोगों के आर्थिक विषयों के सामधान करने की जो व्यवस्था है, उसका स्वागत है। चिट फंड के अलावा भी बहुत से ऐसे नॉन बैंकिंग फाइनेंशियल इंस्टीटयूशंस खुल गए हैं, जिन्होंने लोगों की बहुत बड़ी राशि जमा करा ली, लेकिन कोई व्यवस्था नहीं हुई जिससे उनकी सुरक्षा की जा सके। लोगों का करोड़ों रुपए का घपला हुआ, लोग करोड़ों रुपए लेकर चले गए। इस बारे में सरकार को कुछ ऐसा प्रावधान लाना चाहिए, जिसमें कि आर्थिक जुल्म करने पर कुछ केपिटल पनीशमेंट की व्यवस्था होनी चाहिए। यहां पर जो फोरमैन की व्यवस्था की गई है, जो ५० प्रतिशत की राशि बैंकों में है, वह भी सराहनीय है, लेकिन ऐसा हो कि लोग धोखाधड़ी न करें और जो भी डिपोजिटर्स हैं, जिनके साथ छोटे लोगों ने, जिन्होंने अपने आर्थिक सुधार के लिए राशि जमा की है उनकी सुरक्षा की व्यवस्था होनी चाहिए। उन्हें लोग धोखा न दें, इसके लिए आर्थिक रुप से दोषी लोगों के लिए केपिटल पनीशमेंट की भी व्यवस्था चिट फंड के प्रावधान में लानी चाहिए, जिससे कि लोग अपने को सुरक्षित महसूस करें। उनकी जो राशि जमा की गई है वह सुरक्षित रहे और उन्हें जब उसकी आवश्यकता पड़े तो वह राशि उन्हें मिल जाए।
महोदय, सरकार जिस प्रावधान को लाई है मैं उसका समर्थन करता हूं। इन्हीं शब्दों के साथ बहुत-बहुत धन्यवाद।
(VISAKHAPATNAM): Mr. Chairman, Sir, I thank you very much for giving me an opportunity to participate in the discussion.
The Chit Funds (Amendment) Bill is a welcome sign. But today a lot of people are being cheated by these chit fund companies. The chit fund companies are springing up everyday with some new name or the other. Actually, the Government has no overseeing authority over the activities of these chit fund companies.
The chit fund companies are being registered, but without registration also the business of the chit fund companies is being carried out.
This is a very important piece of legislation. The amendments are sought to regulate the activities of the chit fund companies, but nothing much would be achieved with these amendments because they are just raising it from 30 per cent to 40 per cent. Also, the deposit is being raised from Rs.25,000 to Rs.1,00,000. Any chit fund company can fulfil these conditions. There is, of course, a very stiff condition that bank guarantee from an approved bank, equivalent to 50 per cent of the chit amount, is to be given. But all these conditions are regulatory in nature and are difficult to be imposed.
The Non-Banking Companies Act, under which the chit fund companies are coming up, should be regulated in such a way that there should be stringent action against these companies if they cheat those who are depositing their money in the chits. There should be some punitive action rather than these monetary punishments. In that way only, people could be saved. Also, the accounts of the chit fund companies should be audited at regular intervals. Unless there is an audit report submitted every half-year or every quarter, it may become a very difficult situation to carry on the chit fund business in a regulated manner.
Thirdly, the chit fund companies also have deposits inbenaminames. Suppose, there are 50 persons in a particular chit. Half of them will be holding chits in benami names. Serious action should be taken to find out whether all the members of a particular chit are genuine or not. So, the genuineness is to be regulated.
The other thing is that there should be a set formula for the chit fund companies to invest their surplus deposits. Just like under the Banking Act, here also there should be set principles for investing the surplus moneys or the moneys that are derived through chits. Otherwise, the moneys are being diverted and ultimately, at the time of payment to the bidder, the money is not available. When the money is not available, how will they take action against the chit fund companies, irrespective of their satisfying all the conditions that are being imposed on them? So, there should be a time stipulation that within so many days, the money is to be paid. In the case of a bank deposit, we go to the bank and get back our money, but in the case of a chit fund, if they do not pay the money, no action is taken against them. So, if the money is not paid to the bidder even after giving a certain notice of, say, 30 days or 15 days, stringent punishment should be there.