The Lok Sabha passed the Chit Funds (Amendment) Bill which will raise the monetary limits for chit funds and approves higher commission for “foreman”.

What are the provisions of the bill?

  1. The maximum chit amount is proposed to raised from ₹1 lakh to ₹3 lakh for those managed by individuals or less than four partners, and from ₹6 lakh to ₹18 lakh for firms with four or more partners.

  2. The maximum commission for foreman — the person who is responsible to handle the chit fund process — is proposed to be raised from 5% to 7%.

  3. The bill also allows the foreman a right to lien against the credit balance from subscribers.

  4. The Bill also introduces words such as “fraternity fund”, “rotating savings” and “credit institution” to make chit funds more respectable.

  5. In addition to a proposal for allowing subscribers to join the process of drawing chits through video-conferencing, the bill allows State governments to specify the base amount over which the provisions of the Act would apply.

Source: The Hindu

Relevant for GS Prelims & Mains Paper II; Polity & Governance