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Lok Sabha nod to legislation to regulate chit funds

The Bill proposes to raise the limits of the chit fund operated by individuals from Rs 1 lakh to Rs 3 lakh and for firms from Rs 6 lakh to Rs 18 lakh — these limits were last revised in 2001.

Written by Harikishan Sharma | New Delhi |
November 21, 2019 12:24:21 am
Lok Sabha nod to legislation to regulate chit funds Congress leader Adhir Ranjan Chowdhury supported the BJP on raising the issue of Ponzi schemes. (PTI)

The Lok Sabha on Wednesday passed The Chit Funds (Amendment) Bill, 2019, aimed at facilitating orderly growth of the chit fund sector and enabling greater financial access to people.

The Bill proposes to raise the limits of the chit fund operated by individuals from Rs 1 lakh to Rs 3 lakh and for firms from Rs 6 lakh to Rs 18 lakh — these limits were last revised in 2001. The Bill also proposes to increase the ceiling of foreman’s commission from 5 per cent to 7 per cent of the chit fund amount.

Replying to debate on the Bill, Minister of State for Finance Anurag Thakur said the government will change the law as required to ensure that the money of the poor is not looted. He appealed to the members of the House to rise above party lines and support the legislation.

Earlier, several Opposition members demanded that chit funds be exempted from GST and sought reduction of the proposed commission for foreman from 7 per cent to 6 per cent.

Congress MP from Khadoor Sahib, Jasbir Singh Gill, said imposing 12 per cent GST on chit funds is detrimental and urged the government to exempt it. Thakur said the issue of exemption can be considered in the GST council.

During the discussion, several members cited Saradha and Rose Valley scams. However, Thakur said members should not mix up the issue of unregulated deposit schemes with chit funds.

During the debate, members from the treasury benches and Opposition echoed similar views on more than one occasion. For instance, when BJP MP from West Tripura Pratima Bhaumik raised the issue of Ponzi schemes and their link to West Bengal, Congress leader Adhir Ranjan Chowdhury said lakhs of people have been looted in the state and that the BJP has raised the correct issue.

Three members from the Opposition, N K Premachandran of RSP, Sougata Ray of TMC and K Suresh of Congress moved amendments which were rejected by the House. Later, the House passed the Bill with a voice vote.

This Bill seeks to amend the Chit Funds Act, 1982 and is aimed at protecting the interests of the poor who use chit funds to save money.

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