Chit Act

Chit funds in India are governed by various state or central laws. Organised chit fund schemes are required to register with the Registrar or Firms, Societies and Chits.

This Act may be called the Chit Funds Act, 1982. It extends to the whole of India except the State of Jammu and Kashmir. It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different States.

"approved bank" means the State Bank of India constituted under section 3 of the State Bank of India Act, 1955 (23 of 1955), Regional Rules Banks Act, 1976 (21 of 1976) , or a corresponding new bank constituted under section 3 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980), or a banking company as defined under clause (e) of section 5 of the Banking Regulation Act, 1949 (10 of 1949 ), or a banking institution notified by the Central Government under section 51 of that Act or such other banking institution as the State Government may, in consultation with the Reserve Bank, approve for the purposes of this Act.

"chit" means a transaction whether called chit, chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical installments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount.some alone, but not all, of the subscribers get the prize amount without any liability to pay future subscriptions; or all the subscribers get the chit amount by turns with a liability to pay future subscriptions.

"chit agreement" means the document containing the articles of agreement between the foreman and the subscribers relating to the chit.