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Chit Funds (Amendment) Bill, 2019 in LS, Cong demands referring it to Standing Committee

Chit Funds (Amendment) Bill, 2019 in LS, Cong demands referring it to Standing Committee

New Delhi, Nov 18 (UNI) Opposition Congress on Monday demanded in the Lok Sabha that the Chit Funds (Amendment) Bill, 2019 should be sent to the Standing Committee for scrutiny.

Taking part in the discussion on the Bill, which was moved for consideration and passing by Minister of State for Finance and Corporate Affairs Shri Anurag Thakur in the Lok Sabha, Congress member Saptagiri Ulaka said the main problem in chit fund is of unorganised sector. He said there is nothing in the Bill to benefit and safeguard the subscribers.

The Congress member also made a reference about Chit fund scam in Odisha. He sought to know when the CBI probe into chit fund scam in Odisha will be completed.

Kalyan Banerjee of All India Trinamool Congress demanded that the Bill be scrapped as there were sufficient laws to regulate this sector. Stating that chit funds have become ``cheat funds' to fleece the people, he said the CBI had initiated probe into chit fund scam in West Bengal but had not filed charge sheets yet. ``Why accused not been sent to jail? There are other Acts for unregulated banking sector, there is no need for this bill. Why not scrap it,' he said. West Bengal witnessed Shardha and Rose Valley chit fund scams with a large number of subscribers losing their investments to the tune of thousands of crores of rupees.

R K Raju of YSR Congress party pointed to some anomalies in the amendments and demanded that insurance of investments in such schemes be made mandatory to safeguard the money of investors. He said that the Bill should not give any discretion to the States who should follow the Act strictly. Though officially about Rs. 35,000 crores were invested in chit fund schemes in the country, he said that unofficially the figure would be around Rs. 70,000 to Rs. 80,000 crores. He welcomed the amendments and supported the Bill.

Shiv Sena's Shirange A C Barne said that in Maharashtra alone nearly half a dozen big chit fund scams had come to light in recent times. He said that in Nashik, Pune, Thane and Mumbai lakhs of unsuspecting investors had lost their money to scamsters who had become untraceable overnight and some had even fled to foreign countries. He said that in absence of any action against those involved in such scams, a large number of investors had suffered substantial financial losses. He said that Shardha scam in West Bengal alone ran into Rs. 17,000 crores which was the biggest scam in chit fund sector as people were lured to multiply their investments into manifold times in a short span of time.

Alok Kumar Suman of JD(U) said that official figures showed that about Rs. 4 lakh crore were stuck in chit fund sector involving nearly two crore investors. He said that despite warnings by the RBI and SEBI, people had invested in chit fund schemes on the promise of hefty returns in short time.

Dwelling upon the distress in the nation's economy, Supriya Sule of NCP sought to know as to how the government proposed to regulate the chit fund sector. On the provision of video conferencing in the amendment to the Bill, she wondered how the video conferencing would be accomplished when call dropping itself was taking place. She stressed on the need to undertake financial literacy programmes for all segments of the society in the country.

B. Mahtab of Biju Janata Dal stressed on strengthening the regulatory mechanism of chit fund sector. He said that preventive methods should be given much more importance to make people aware of the pitfalls. The BJD member said that accountability in chit fund schemes often became a casualty, adding that there was an urgent need to enforce it strictly.

The Bill was introduced in the Lok Sabha on August 5 during the Monsoon session.

The Bill which reduces the regulatory or compliance burden of registered chit funds industry was approved by the Union Cabinet in July for its introduction in Parliament.The Bill seeks to achieve insertion of the words "fraternity fund", "Rotating Savings and Credit Institution" in clause (b) of Section 2 which defines "chit" and also in Section 11, to signify its inherent nature and distinguish its working from "prize chits" which are

banned under a separate legislation.

It proposes to substitute the expressions "gross chit amount", "share of discount" and "net chit amount" for the expressions "chit amount", "dividend" and "prize amount" respectively in the Act to remove confusion with respect to illegal prize chits.The Bill seeks to revise the prescribed ceiling of aggregate chit amount from Rs 1 lakh to Rs 3 lakh for individuals and from Rs 6 lakh to Rs 18 lakh for firms, which have not been revised since 2001. It's focus is to allow the mandatory presence of two subscribers, as required under sub-section (2)

of Section 16, either in person or through video conferencing duly recorded by the foreman.

It proposes for the presence of the mandatory two subscribers through video conferencing, the minutes of the proceedings to be signed by them within two days of the date of the draw, and to increase the ceiling of foreman's commission from five per cent to seven per cent under Section 21.

The Bill seeks to enable the foreman to have a right to a lien against the credit balance in other non-prized chits, and to amend clause (b) of section 85, so as to confer power upon the state government to specify the amount by notification, upto which any chit fund shall be exempted under the Act.

UNI NY VT 1753

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