INTRODUCTION.

The origin of chit funds or ‘bishi’ stretches back to the verdant green lands of Kerala where existed a

system of pooling together and sharing of grains by the peasants amongst themselves. Chit or kuri in

Malayalam implies a written note on a small piece of paper. The convention of running chit funds

caught up among rural households since long who considered it as an easier means of obtaining credit

as a substitute to banking finance. The business is primarily run on a fiduciary trust reposed upon the

foreman by the subscribers to the fund. Chit is also known by another name “ROSCA” which is Rotating

Savings and Credit Association which has been in existence in various forms throughout the world. The

concept underlying the term ROSCA is raising social capital for the benefit of participants. The most

common name for ROSCA in South Africa is ‘stockvel’ , ‘ekub’ in Eritrea, ‘huis’ in Vietnam, ‘tontines’ in

Cameroon, ‘susu’ in Ghana, ‘esusu’ in Nigeria, ‘samiti’ in Bangladesh, ‘tanamoshi’ in Japan, ‘dhituti’ in

Nepal, ‘hui’ in Taiwan, ‘hacba’ in Yemen, ‘meetings’ in Barbados, ‘pasanaku’ in Bolivia, ‘mutualista’ in

Mexico, ‘pandero’ in Peru, ‘chitty’ again in Trinidad, ‘cuchuval’ in Gaetimala, ‘fokontany’ in Madagascar

and ‘haghad’ in Somalia.

The concept of Chit funds came into being in the 1800's when Raja Rama Varma, ruler of erstwhile Cochin state gave a loan to a Syrian Christian trader, keeping a certain portion of it to himself for administrative and other expenses.

Later, to manage the increasing numbers of those seeking loans, he ordered a cast of lots and gave the accumulated amount to those who drew the lot on the principle of equity.

Gradually the practice spread to other parts of the country and even abroad, including Myanmar and Sri Lanka, he said.

But real streamlining of operations was somewhere between 1830 and 1835, when the Chaldean Syrian church started Kuries under its name and issued passbooks to subscribers as evidence of enrolment.

Another interesting version of the origin of chits is linked with Portuguese missionaries from China, who visited Muziris (Kodungalloor) off and on for evangelization and established a seminary at Vypeencotta village in 1577. They reportedly encouraged promotion of chits in Kodungaloor.

The operation and conduct of the chit funds in the state of Kerala is governed by the Chit Funds Act,

1982. The Act of 1982 became operative in Kerala since May 2012 by virtue of a notification by the

Kerala Government to give effect to the ruling of the Constitution Bench of the Supreme Court chaired

by the former Hon’ble Chief Justice S.H.Kapadia. The Kerala Government subsequently brought out the

Chit Funds Rules 2012 forming part of the Act. There are nearly 5000 chit fund companies in the state

and the business is about Rs.85000 crores. In Kerala the different forms in which chit funds are

constituted are the public sector company Kerala State Financial Enterprises Ltd, co-operative sectors,

private chits and those in the unorganized sector. In places like Thrissur, churches have started kuries in

the form of palli kuries to help the members of the church in financial distress.

Kerala State financial Enterprises Ltd

Established in 1969, the company is fully owned by the Government of Kerala. It is ostensibly the most

profit-making public sector undertaking of the State. It was created by the Kerala Government with the

objective of providing alternative to the private chit sector and to bring social control over the chit fund

business.

BIBLIOGRAPHICAL CITATION

Robert D. Cooter (2011) in his book titled “Solomon's Knot: How Law Can End the Poverty of Nations” draws resemblance of the chit funds to the relational finance in Silicon Valley. According to him the poor people who own nothing to pledge as security live outside the formal banking system. This lack of access to banking credit draws them nearer to the dependence on chit funds. He argues that the chit funds were controlled by the social laws and not the state laws in earlier stages. Dimitri A.Germidis, Denis Kessler and Rachel Meghir (1991) in the book titled “Financial Systems and Development: What role for the Formal and Informal Sectors” observe that “ what charactesises the case of Indian chit funds is their stage by stage development from simple rotating mechanisms in kind, through a stage of increasingly sophisticated ROSCA-type arrangements, to eventually culminate in the corporate form of chit fund companies run by institutional foremen. The process was largely spurred on by experience, introducing innovations, and effecting modifications to suit the environment in which they operated as well as the changing characteristics and requirements of participants”.

Virendra Kumar (1976 ) in the book titled “Committees And Commissions In India Vol. 1 : 1947-54 cogitates on the need to harness legislation to regulate the operation of chit funds. His suggests three lines of action : (1) State Government may start chit funds at strategic places acting as model foreman. (2)Commercial banks may run chit funds subject to proper regulation by the Reserve Bank of India (3) An all-India chit fund law may be enacted by the Central Government or a model law may be framed to be adopted by the State Governments. In his book titled “Financial Services” Thummuluri Siddaiah opines that the integrity and financial soundness of the manager or foreman is very much essential for the success of chit funds. He emphasizes on the need to conduct financial due diligence not only on the manager of the chit funds but also on the other members of the group before a prospective member enters into an agreement with the chit fund.

In the book “Money-Go-Rounds: The Importance of ROSCA s for Women” Shirley Ardener (1996) quips “where incomes are very low, where there is no formal social security network, where ill-health stalks and a variety of calamities hover, a system of low-cost ROSCAs, as has operated in West Africa for many years, helps to meet the challenges for all but the very impoverished or destitute. ROSCA s are also sometimes initiated in response to the sudden need for liquidity to take advantage of unpredicatable flows of desired durables (such as bicycles)…..”

The book “China in the Global Economy Rural Finance and Credit Infrastructure in China” by Organisation for Economic Co-operation and Development (2004) relates about the development of ROSCAs in Xiang Dong village in China. It observes that the aim of the villagers in establishing the ROSCAs is generally to finance family emergencies in their daily lives. The percentage of villagers who raise commercial capital through the means of ROSCA is relatively low. The members to the scheme are trustworthy which ensures that there is no default. Therefore, the financial risk is very limited. KEY DEFINITIONS UNDER CHIT FUNDS ACT, 1982 Chit means a transaction also called chit, chit fund, chitty, kuri or by any other name. In such transactions, a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money by way of periodical installments over a definite period. Each such subscriber shall be entitled to the prize amount as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement. Chit agreement means the document containing the articles of agreement between the foreman and the subscribers relating to the chit. In Malayalam it is known as “Variyola”

Chit amount means the sum-total of the subscriptions payable by all the subscribers for any installment of a chit without any deduction of discount or otherwise. Discount means the sum of money which a prized subscriber is required to forego and which is set apart under the said agreement to meet the expenses of running the chit or for distribution among the subscribers or for both. Dividend means the share of the subscriber in the amount of discount available under the chit agreement for rateable distribution among the subscribers at each installment of the chit. It is known as “veethapalisha” in Malayalam. Foreman means the person who under the chit agreement is responsible for the conduct of the chit. In Malayalam he is known as “munnal”. subscriber fraction includes a person who hold a of a ticket law and also a transferee of a ticket or fraction thereof by assignment in writing or by operation. In Malayalam he is known as “chital”.

Prize amount means the difference between the chit amount and the discount. Registrar means the Registrar of Chits appointed under section 61 of the Chit Funds Act, and includes an Additional, a Joint, Deputy or an Assistant Registrar Ticket means the share of a subscriber in a chit. Procedure to Join Subscribers should fill prescribed applications, with personal details, salary details, contact details,

nominee details and other things. Format for the application are available at every Branch office

after providing KYC Norms.

Eligibilty to receive dividends

Once the subscriber pays full subscription for 2 months then from 3rd month

he will be eligible to receive dividends.

Range of Discount

Maximum discount will be – 30% and Minimum discount will be 5%.

Use of Chit Funds

Address needs like –

Marriage, Education, Property, etc…

Pay off Costlier loans

Address working capital, business expansion, start-up capital

Emergency need

Future savings

Safety of Chit Investments

Chit Funds in India are regulated and institutionalized. Legal Chit Fund operators provide variety

of chit schemes. Chit schemes have transformed to chit business as they became a regulated

activity to provide security for saving made.

Twin Benefits of Chit Funds Serves two main benefits - serves people who need funds and serves people who want to save.

Prized and Non-prized Subscribers

A subscriber who has lifted his chit or to whom the chit amount is paid is called a prized subscriber.

A subscriber who has not lifted his chit or to whom the chit amount has not been paid yet is called a non-prized

subscriber.

Chit Funds vs. Bank Deposits

By joining a chit fund, a person is forced to save a small part of his income, to meet his Planned

/unplanned investments or expenditure. In case of contingency, borrowing from the chit fund is much

easier, simpler, faster and cheaper than borrowing from a bank. The chit loss is normally lower than the

market rate of interest. In case a person wants to save till the last, the return a subscriber gets by way of

chit dividends is much higher than interest from banks on recurring deposits.

Chit Loss

Since the successful bidder, in the initial few months is allowed to use the chit amount, for his personal

use ahead of others, he offers to take the chit amount at a discount, after calculation interest and cost

of funds. It may be noted that a successful bidder withdraws more money from the company, than he

had already paid, and repays the excess amount withdrawn, in periodic installments until completion of

the chit period. The excess amount so paid is known as chit loss.

Auction Discount

The difference between chit value and the amount at which a successful bidder takes a chit in a lottery

auction is known as auction discount.

Auction

Auction is a procedure for identification of the non-prized subscriber who wants to take a chit amount at

the highest permissible discount. All non-prized subscribers who have paid their installments up to date

are allowed to participate in the auction for bidding up to the highest auction discount, within a period

of five minutes allowed for each auction.

Dividend

Auction discount minus company commission (5% of chit value) is the total group dividend. Total group

dividend is distributed equally amongst all the subscribers. This dividend so distributed is deducted from

the next installment payable by the subscriber.

Lot

When more than one non-prized subscriber wants to take the chit amount at the same discount, the

chit numbers (coins) of all such non-prized subscribers are put in a container and the successful bidder is

identified by removing one number (token coin) from the said container. The procedure is known as lot

or lottery.

Coming to Open

When there is no member in the chit group who is willing to receive the prized/bid amount at the

maximum allowable discount, the bidding for the chit comes in for open auction. This is known as

coming to open.

Vacant Chit

All the dividends receivable till date of joining the group are earned by the member joining a vacant chit.

Foreman

The chit fund company conducting the chit business also known as Foreman charges 5% of the chit value

as commission or service charge for the services rendered by it. The foreman has to gather a group of

persons to form a chit group, collecting money from each subscriber every month, arranging payment of

prized money to one person each month and collecting money from prized subscribers etc is work for

the foreman.

Surety/Guarantee

A chit fund company undertakes to collect periodic installments from all the subscribers and pay the

amount so collected, after deduction its commission (5% or the chit value) to one of the non-prized

subscriber each month. At every point in time, the chit fund company pays the prized subscriber more

money, than what it had collected from the prized subscriber, on the understanding that the prized

subscriber will pay the balance future installment on time. In other words, the prized subscriber takes a

loan advance from the chit fund company, with an understanding to repay the balance future

installment in time, to enable the foreman to pay the prized money to other non-prized subscribers each

month. In order to safe guard the interest of all non-prized subscribers each month the chit fund

company insists upon the prized subscriber to provide guarantee for repayment of future installments.

Income Tax implications

The chit loss can be deducted from the income from profession or business. The net surplus or dividends

after completion of the chit period need to be offered as income, but some courts have ruled that this

income is not subject to income tax.

Duration of the Chit

The duration of chits are normally 25 months, 40 months and 50 months depending on the number of

subscribers joining the fund.

Chits (vs) Fixed deposit

A Fixed deposit is accepted for a pre-determined time period. Interest paid by banks range between 7.5-

9.5% and is dependent on government regulation. The interest earned from fixed deposits can either be

taken out periodically (monthly/quarterly/half yearly/yearly) or an investor can earn cumulative interest

which is paid at the end of the term period. Fixed deposits offered by corporate sector carry a higher

rate of interest but are risky and an investor will have to take an informed decision. A fixed deposit is

illiquid. The principle amount cannot be used by the investor, if he has to incur any unforeseen

expenditure. If the investor opts for a cumulative interest group, the entire amount is returned only on

maturity of the fixed deposit.

A chit on the other hand can help an investor by paying him an interest rate between 12-16%. The

interest is paid in the form of dividend. If an investor has lump sum amount, he can invest the same in a

vacant chit. By investing in a vacant chit, the waiting period is shorter; the investor can participate in an

auction and use those funds for any planned or unplanned expenditure or wait until the end of the chit

and enjoy higher dividends.

Chits (vs) Recurring deposits

Recurring Deposit scheme is offered by almost all banks in one form or the other. Recurring Deposit is

very popular among the salaried class, especially who can afford to save only few hundred or say few

thousand rupees per month. This scheme is a boon for people who do not have a large amount of

savings and thus cannot use the Fixed Deposit scheme of the banks. Under this scheme, the customer

deposits a minimum amount (normally fixed) every month and bank pays the interest at the pre-

determined rates (which is usually lower than that for fixed deposits). At the end of the period i.e. on

maturity date, the customer is paid the maturity value i.e. principle deposited and the interest payable.

The current rate offered by banks is around 8.5%. This is subject to government regulation.

The same money can be invested in a chits and the investor can earn 12-16%. He can also borrow

against the chit which is not possible with a recurring deposit.

Chit (vs) Bank Loans

Tremendous growth in the banking sector has seen an explosion of personal loans given to young

salaried employees in the information technology, BPO and other sectors. This segment has higher

disposable income and is willing to spend on cars, motorbikes and the like. Banks/financial institutions

charge an interest rate anywhere between 12-24% on personal loans. There is also no guarantee that

the loan application will be accepted. The Equated Monthly Installments (EMI’s) are higher due to higher

interest costs. If an employee is smart, he can plan his purchase of a car using a chit. The interest cost,

paperwork and sureties required are much lesser in comparison with a personal loan.

Chits (vs) Mutual Funds

Systematic Investment Plans or SIP’s as they are popularly known are marketed aggressively to the

younger generation, high net worth individuals and the like. A SIP is a financial scheme where

investments are made daily, monthly or quarterly. These investments are invested by the fund company

in the stock markets. Every fund has a Net Asset Value (NAV). The fund issues shares. The number of

units allotted to the investor would depend on the amount he invests and the NAV of the fund at that

particular point in time. So the number of units issued would vary depending on the NAV. It is important

to note that the NAV is entirely dependent on the market conditions prevailing at that time. There are

chances where the current value of investment is less than the actual cost of investment. There are

entry and exit loads i.e. charges which have to be paid by the investor to join or exit the fund. To sum up

investing in a mutual fund carries moderate to high risk depending on the market.

Investing in a chit is similar to a SIP, where the investor would invest money monthly into a chit fund

group he chooses. The monthly installment would vary depending on the competition in the group.

There is no entry or exit fee charged and the risk involved in investing here would be very low in

comparison to a mutual fund.

Chits (vs) Credit Card

Credit card is a convenient way to spend money. It entices the customer as he does not have to shell out

any money when he makes purchases at a retail store. It also induces him to spend more than he can

actually afford with the BUY NOW – PAY LATER mantra. The bank at the end of the billing cycle, which is

usually at the end of the month, allows its customer to pay a minimum balance instead of the full

amount allowing its customer to carry the remaining balance to the next month. The bank allots a higher

credit amount without giving much thought to the paying capacity of the customer. The customer falls

into this trap by buying more than he can afford, paying the minimum balance at the end of the month,

transferring remaining balance to the next month. This becomes a vicious cycle. Little does the customer

realize that he is charged exorbitantly almost up to 40% when the credit card balance is revolved in this

manner. He gets caught in the credit card debt trap.

A smart investor would want to use the SAVE-BORROW-PAY mantra instead of BUY NOW – PAY LATER.

He would save at a higher interest cost, borrow at a lower cost and rescue himself form unnecessarily

exorbitant interest costs. This is possible by having financial discipline and by planning, investing and

saving and borrowing using chits.

Chits (vs) Stock Markets

Investing in the stock market requires a lot of personal time and effort to understand the financials of

the stock, to time the market and buy the stock. After purchasing the stock, the investor cannot be

complacent. He must keep a track of the stock market and the company in which he has brought stock

and keep a constant tab on whether he in must hold or sell the stock. Even an investor who wants to

invest for a five year time period must keep himself abreast with the happenings of the stock market. He

must make financial calculations whether the returns gained from the stock market may be more than

what he would have gained from a less risky financial instrument, like a chit.

HOW CHIT FUNDS WORK

Let’s say there are 20 people who come together and form a group. Each one will contribute Rs 1,000 per

month and this will continue for next 20 months (equal to number of people in the group). In this group

there will be one organiser, who will take the pain of fixing the meetings, collecting money from each

other and then doing other procedures. So each month all these 20 people will meet on a particular day

and deposit Rs 1,000 each. That will make a total of Rs 20,000 every month. Now there will be a bid on

who will take this money. Naturally there will be few people who are in need of big amount because of

some reason like some big expenses, liquidity crunch, business problem, Beti ki Shaadi etc etc … Out of

all the people who are in need of money, someone will bid the lowest amount, depending on how

desperate he is for this money. The person who bids for lowest amount wins. Suppose out of total 3

people who bid for 18,000, 17,000 and Rs 16,000, the one who bids the lowest will win. In this case it’s

the person who has bid Rs 16,000.

There will also be “organiser charges” which are around 5% (standard) of the total amount, so in this case

its 5% of Rs 20,000 , which is Rs 1,000. So out of the total 16,000 which this winner was going to get, Rs

1,000 will be deducted and the winner will get only Rs 15,000, Rs 1,000 will be organiser charges and Rs

4,000 is the profit, which will be shared by each and every member (all 20 people), it comes out to be Rs

200 per person, and it will be given back to all 20 members. So here you can see that the main winner

took a big loss because of his desperate need of getting the money and others benefitted by it. So each

person actually paid just 800, not 1,000 in this case (they got 200 back). Note that when a person takes

the money after bidding, he can’t bid from next time, only 19 people will be eligible for bidding.

Now next month the same thing happens and suppose the best bid was Rs 18,000 , then winner will get

17,000 (after deducting the organiser fees) and the rest 2,000 will be divided back to people (Rs 100

each) . So each person is paying effectively Rs 900. This way each month all the people contribute the

money, someone takes the money by bidding lowest, organiser gets his charges and the rest money is

divided back to members. You will realise that the person who takes the money at the end will get all the

money except organiser fee, as there is no one else to bid now. So the person will get around Rs 19,000 in

the end, if you try to find out the returns which he got out of the whole deal, it will depend on two things,

how much lower bids were each month and the fees paid to organiser, if bids and charges are very low,

then a person will make more money at the cost of other situations.

So this is pretty much how a chit fund works, there are various versions of chit funds and how they work ,

but the idea was to communicate the basic model and how it works.

KINDS OF CHIT FUNDS

In Kerala lot chits are the most popular ones in the unorganized sector and the private chit sector. The

business chits and the tender chits are the other forms of chits which caters to the capital requirements

of Commercial enterprises. Of late, chit funds have started going online.

1. Lot Chits

It is akin to draw of lottery where the winner is selected from among the participating members

of the chit by draw of lots. Luck plays a crucial role and the prize may not be harnessed by the

person who needs it most. Only a foreman’s commission is deducted from the prize money and

there is no margin generated in the form of discount. Therefore, these forms of chits became

unattractive gradually later though it still exists among women in small hamlets.

2. Business Chits

In these kinds of chits the winner is decided on the basis of bids being raised from among the

subscribers. One who quotes the highest per cent of discount as bid is declared the winner.

When there is a tie in the bids the prized subscriber is selected by way of draw. This is the most

popular form of chit in as much the subscriber in need is able to fulfill his urgent credit

requirement promptly. The difference between the prized amount less foreman s commission

and the bid amount is distributed among both the prized and non-prized subscribers.

3. Tender Chits

In tender chits, the bids are raised through sealed tenders which contains the name of the

bidder and the discount amount. The tenders are opened in the presence of bidders and the

person who quotes the highest discount is selected

Chapter 2

Kerala State Financial Enterprises Ltd.

Origin

KSFE was created by the Government of Kerala on 6th November 1969.

The paid up capital then was Rs.2 Lakhs.

Total Number of employees at the start was 45.

The number of branches KSFE began with was 10

The Head Office of KSFE is placed in Thrissur.

Situation as on September 2012

Paid up Capital Rs.20 Crores

Total number of employees is more than 5,267

Seven Regional Offices at (1) Thiruvananthapuram (2) Kollam (3) Kottayam (4) Ernakulam (5)

Thrissur (6) Kozhikode and (7) Kannur

The number of branches is 427

The number of customers is more than 29 Lakhs

Annual business is Rs.16,451 crores.

The instalment per month for chitties range from Rs.500 to Rs.250000 and the usual duration of chits

are 30 months, 40 months, 50 months, 60 months and 100 months.

The Chitty turnover has seen an increase from Rs.1451 crores in 2001-02 to Rs.9049 crores.

Management

The company’s management is vested in the Board of Directors constituted by the Governor. The

number of directors shall not be less than two and not more than fifteen. The Governor may appoint

two directors other than the Managing Director as the Chairman and the Vice Chairman. Presently,

there are 14 directors including Chairman and Vice Chairman, Managing Director, Additional Secretary

(Taxes), Additional Secretary (Finance) and I.G. of Registration.

Objects

1. To start, conduct, promote, manage and carry on the business of chitties in India or elsewhere.

2. (b) To promote, undertake, organize, conduct, manage and carry on the business of general and

miscellaneous insurance of any kind in India or elsewhere.

To start, promote, conduct, operate, carry on and manage the business of dealers,agents and traders under hire purchase

system of articles, vehicles, machinery,materials goods and tools, of all capital goods and consumer goods and property

of all nature and description for personal, domestic, office, commercial, industrialand community use and consumption as a

business of the Company or as agents of the Government, State or Central or any body or organization there

under or of any other Company. Besides these objects, there are many other objects, which isincidental or ancillary

to the main objects such as to advance, deposit with or lendmoney, securities, property or to receive loans or

grants or concession of anynature or deposits from Banks, Government or Governmental organizations or

others.

VISION OF THE COMPANY The vision of Kerala State Financial Enterprises is to become a significant playerin the financial services sector

by:- Providing a whole range of quality services and products. Adopting technology and benchmark standards in customer service andperformance. Spreading our wings beyond the borders of Kerala, on a global level Retaining the pre-eminent role in Chitty business. Continuing focus on extending resources to the Govt. of Kerala. Sustaining commitment to the weaker sections of society, as theneighborhood institution for support, trust

and security. FUTURE PLANS OF THE COMPANY The government is taking appreciable steps to widen the business activity of KSFEand to reach every

category of people. The future plans of the company include thefollowing:- Making KSFE a fully computerized Company

Opening more and more new branches, including chitty units to establish itspresence in all major centers and

backward areas, aiming at effective ruralpenetration. Introducing value additions in chitty schemes - for coping with the fiercecompetition in the financial

market, for more popularity and widening ourcustomer base. Acting as the collection agent for KSEB, KWA, etc., throughout the state.

To construct a multi-storied building in KSFE's own premises in Kakkanad,Cochin and to house among others a

Staff Training College for itself.

Introduction of new schemes like, Educational Loan, Agricultural Overdraftand Cumulative Deposit Scheme.

Expanding its door collection facility to loan accounts and deposit schemessuitably, this is expected to

create considerable employment opportunities aspart of its social objective.

Introduction of chitties with simultaneous draw and auction which can beoffered as an incentive to regular

customers for whom it will be a greatattraction, particularly for those with saving attitude.

Introduction of Daily/Weekly draw/auction chitties, which is expected tohave a wide scope among

traders, will raise the Company's market shareconsiderably.

Enter the arena of Credit/Debit Card business - immediately after branchnetworking the Company plans to launch

the 'Debit Card' business.

Starting of Virtual Branch through net worked computer systems for thebenefit of NRIs particularly

Malayalees in the Gulf & other countries is onthe anvil. This will obviate the need for "brick and mortar

branches" andwill enable customers who have internet access, to transact with theCompany through virtual

branches.

PRODUCTS PROFILELINE OF PRODUCTS

CHITTY – THE PILLAR PRODUCT OF KSFE

OTHER PRODUCTS

LINE OF PRODUCTS

Chitty

Chitty Loan

Consumer/Vehicle Loan

Reliable Customer Loan

Gold Loan

Passbook Loan

Trade Finance

Housing Finance

Sugama Deposit

Fixed Deposit

Car Loan

Flexy Trade Loan

Sugama Security Scheme

Deposit-in-Trust Scheme

Safe Deposit Locker

Tax Planning Loan Scheme

Western Union Money Transfer

Chitty Loan

What is Chitty Loan For?

Chitty Loan is a bridge between your actual financial need and the delay in chitty getting prized in your favour

When am I eligible for a chitty loan?

If you are a non-prized subscriber in a chitty and remitted 10% of the total number of instalments

promptly, you are eligible for an advance up to 50% of the total chitty amount or sala (gross subscription

to be remitted per month multiplied by the number of instalments in the Chitty).

What is the maximum amount of advance?

The maximum amount of advance is Rs.50,00,000/- under this category.

How are the Principal and the interest of the Chitty loan settled?

The principal of the advance is settled by adjustment from the Chitty prize money and the interest has to be remitted every month.

What is the interest rate?

The interest rate of the advance is 15% (simple) and for defaulted accounts 17%.

Chapter 3

IMPORTANT PROVISIONS OF THE CHIT FUNDS ACT, 1982

Object of the RBI Act Relevant Sections

RBI ACT Chit Fund Act 1982

Registration 45 1A Sec. 4 and 14 etc.,

Minimum capital requirements 45 1A Sec. 8(1)

Prudential norms 45 1B Sec. 13

Reserve Fund 45 1C Sec. 8(3)

Security deposit NIL 20(1)(a)

1.The State Government may exempt any Chit fund from all or any of the provisions of the Central Act.

2. According to this Act, no bank can commence or carry on chit business after the commencement of

this Act.

3. This Act does not apply to any Chit fund the amount of which does not exceed one hundred rupees.

4. This Act extends to the whole of India except the State of Jammu and Kashmir.

5. According to this Act, the chit manager needs to deposit 100% of the chit value with the Registrar of

Chits prior to the commencement of the chit scheme. This deposit will be refunded to the chit manager

on the successful completion of the chit cycle.

6. A Chit fund registered under this Act needs to have its accounts audited by a qualified Chartered

Accountant. The fixed deposit made at the beginning of the scheme will be refunded only on the

submission of the audited Balance Sheet and Statement of Accounts.

7. The Act also requires all registered Chit funds to impose a 40% cap on the bidding amount. This 40% is

calculated on the chit value of the scheme. This bid-cap is administered to ensure that the bid does not

rise uncontrollably leading to subsequent default by the bidder. The minimum bid is restricted to 5% of

the chit value which is the foreman‟s (or chit manager‟s) commission.

CHAPTER 4

GROWTH AND REACH Another important development of Chit Fund Business in Keralafrom the late seventies was

the flight of Chit foremen to other states for starting Chits, though they virtually operated in

Kerala. The flight of theforemen was due to the existence of certain rigid provisions of the

KeralaChitties Act, 1975 prevailing in the State. This resulted in a sharp decline in

the registration of Private Chits in the State causing loss of revenue to the Government and

also instances of malpractices by the foremen.

A significant development in the evolution of Chit Finance in Kerala in the mid 1990's

was the introduction of 'Chit-like' schemes as MonthlDepositScheme(MDS),Monthly/Mutual

Benefit Scheme (MBS),Monthly Benefit Deposit Schemes (MBDS), etc. by the Co-operative

Societies, Primary Co-operative Banks and by the Urban Co-operative Banks.The above

schemes function exactly like the Chit scheme. The only difference is in the usage of new

terms instead of Chitty. The main advantage of suchschemes over the Chit scheme is the

minimisation of the formalities and procedures. They can be conducted by any society or

bank after obtaining sanction for their bye-laws from the Joint Registrar of Co-operatives of

the concerned circle. The number and volume of these 'Chit like schemes' are large and are

significant in mobilising savings even from the low income groups of rural and urban

localities. But no authentic information about them is available with the Government of

Kerala since they are outside the scope of the Kerala Chitties Act, 1975.

The starting of Corporate Chits, which serve the needs of the corporate sector, can be viewed

as another important stage of development in the evolution of Chit Funds. The Model Chit

Corporation Ltd., Hyderabad floated in August 1995 introduced for the first time in the

country, the Rs.l Crore Chit, which was named the 'Century Line Series' (Krishnamurthy 16

1997). In the changing scenario and in the context of increasing need for funds,Chit Funds

play a vital role in meeting the requirements of not only individuals,but also serve as a useful

source of finance to the corporate sector.

Comparison with scheduled bank financing Table 2-1 Scheduled Bank Deposit and Credit and Chit Fund Money Circulated 2006

Scheduled banks Chit Funds

Deposits (USD) Credits (USD) USD

Amount

(millions)

Per

capita

Amount

(millions)

Per

capita

Total

money

circulated

(millions)

Amount

per

capita

Andhra

Pradesh

24184 300 19842 246 1481 258

Delhi 54872 3197 37782 2201 56 400

Karnataka 27733 494 21300 379 NA NA

Kerala 16402 480 10120 296 39 12

Tamil Nadu 27469 423 29083 448 761 236

Source: Bank - Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks, March 2006

& 2007, RBI. Chit Funds – State Registration Office.

Note: Amount per capita is calculated on all state household population for scheduled banks and on all

chit fund household participant for the chit industry. The total money circulated via Chit Funds for the

year 2006 as compared to bank finance is indicated in the above table.

Total money circulated via chits per household

2003 2004 2005 2006 % Change

Andhra Pradesh 825 850 905 1003 21.57

Delhi 1576 1505 1469 1555 -1.33

Tamil Nadu 788 794 819 917 16.37

Kerala 36 38 41 45 25

The total money circulated via chits calculated on a per household basis increased by 21% in

Andhra Pradesh, 16% in Tamil Nadu and 25% in Kerala between 2003 and 2006. During the

same time period, it decreased by 1% in Delhi.

Share of households participating in Chit Funds5

2003 2004 2005 2006 % Change

Andhra

Pradesh

6.56 7.49 7.53 7.14 8.84

Delhi 0.46 0.75 0.87 0.87 89.13

Tamil Nadu 4.29 5.11 5.21 4.94 15.15

Kerala 9.48 9.48 9.37 9.86 4

The share of households participating in Chit Funds increased by 9% in Andhra Pradesh, 89% in

Delhi, 15% in Tamil Nadu and 4% in Kerala between 2003 and 2006.

Comparison with outside option

The most popular outside options to Chit Fund members, besides family and

friends are moneylenders, banks, and unregistered Chit Funds. These options

vary in the terms and conditions offered. The table below highlights the most salient

features of each option.

Parameter Registered

Chit

Funds

Moneylenders Banks/Formal

Institutions

Unregistered

Chit Funds

Collateral

Requirements

Depends on

the chit fund

manager and

credit history

of the member

They usually

accept

personal

guarantees Other types of

collaterals

accepted are

– post dated checks,

insurance policy,

house/land

property

Papers etc.

Depends upon

the type of

moneylender.

Loans with or

without collateral are available.

Variety of items

considered as

collateral

Legal

ownership transferred /not

transferred

depending

borrower

closeness.

Depends upon the type

of loan asked for.

Most of the banks do ask

for some kind of collateral

– Insurance policy,

House/property papers

etc.

Interest rate

applicable varies with

the amount/quality of

the collateral

provided

Usually no

collateral required

since member and

chit fund manager

know each other

personally.

Chit fund owner

sometimes asks

for bond paper

worth the value of

one chit

installment which

will be returned to

the member after

he wins the bid.

Interest Rates

Usually no

collateral

required since

member and chit

fund manager

know each other

personally.

Chit fund owner

sometimes asks for

bond paper worth

the value of one chit

installment which

will be returned to

the member after he

wins the bid.

Rates ranging

from as low as

1% per month to

as high as 20%

per month are

observed.

There are minor

variations based on the

type of loan and

collateral provided

and profile of

the borrower.

PLR: 12.75% - 13.25%

per annum

The average

interest rate varies

from 1% to

2% per month.

CHAPTER II - REGISTRATION OF CHITS, COMMENCEMENT AND CONDUCT OF CHIT BUSINESS

4. Prohibition of chits not sanctioned or registered under the Act.-

(1) No chit shall be commenced or conducted without obtaining the previous sanction of the State Government and unless the chit is registered in that state in accordance with the provisions of this Act:

(2) An application for the purpose of obtaining a sanction under subsection (1) shall be made by the

foreman in Form I and shall be

addressed to the Deputy Registrar of Chits of the District concerned. It shall

be submitted in triplicate to the Assistant Registrar of Chits by whom the chit

is to be registered, in person or by post, along with three copies of the chit

agreement and the prescribed fees.

If the applicant is a company or a cooperative

society the application shall also be accompanied by three copies

each of the audited balance sheet . Where the security offered is immovable

property the application shall also be accompanied by a copy of the certificate

of sufficiency of security.

(2) The Assistant Registrar of Chits shall, on receipt of the application,

forward two copies each of the application, the balance sheet and the

statement of accounts if any, to the Deputy Registrar of Chits of the District

with his remarks.

(3) The Deputy Registrar, in turn, shall send a copy each of the

application and the said documents to the Inspector of Chits of the District,

for verification, enquiry and report.

(4) The Inspector of Chits shall make necessary enquiries and submit a

concrete report containing his specific remarks and recommendations as to

the eligibility / fitness or otherwise of the case for sanction, to the Deputy

Registrar of Chits.

(5) The Deputy Registrar may, on receipt of the report of the Inspector

of Chits, after considering all relevant facts and satisfying himself in that

regard,-

(i) either accord or refuse to accord sanction,

or

(ii) call for such further information or facts or materials, which,

in his opinion, are necessary for arriving at a decision and,

after considering them, accord or refuse to accord sanction.

(6) A copy of the order according or refusing sanction shall be

communicated to the Assistant Registrar of Chits who forwarded the

application

6. Form of chit agreement.-

(1) Every chit agreement shall be is duplicate and shall be signed by each of the subscribers and the foreman and attested by at least two witnesses and it shall contain the following particulars, namely:-

(a) full name and residential address of every subscriber; (b) the number of tickets including the fraction of a ticket held by each subscriber; (c) the number of installments, the amount payable for each ticket at every installment and the interest or penalty, if any, payable on any default in the payment of such installments; (d) the probable date of commencement and the duration of the chit; (e) the manner of ascertaining the prizing subscriber at each installment; (f) the maximum amount of discount which the prized subscriber has to forego at any installment; (g) the mode and proportion in which the discount is distributable by way of dividend, foreman's commission or remuneration or expenses for running the chit, as the case may be; (h) the date, time and place at which the chit is to be drawn; (i) the installment at which the foreman is to get the chit amount; (j) the name of the approved bank in which chit moneys shall be deposited by the foreman under the provisions of this Act; (k) where the foreman is an individual, the manner in which a chit shall be continued when such individual dies or becomes unsound mind or is otherwise incapacitated; (l) the consequences to which a non-prized or prized subscriber or the foreman shall be liable in case of violation of any of the provisions of the chit agreement; (m) the conditions under which a subscriber shall be treated as a defaulting subscriber; (n) the nature and particulars of the security of to be offered by the foreman; (o) the dates on which and time during which the foreman shall, subject to the provisions contained in section 44, allow inspection of chit records to non-prized and unpaid prized subscribers; (p) the names of the nominees of each subscriber, that is to say, the names of the persons to whom the benefits accruing to the subscriber under the chit may be paid in the case of the death of the subscriber or when he is otherwise incapable of making an agreement; (q) any other particulars that may, from time to time, be prescribed.

7. Filing of chit agreement (1) Every chit agreement shall be filed in duplicate by the foreman with the Registrar.

Every application for

registration of a chit agreement to be made by the foreman to the Assistant

Registrar shall be in Form II . The chit agreement shall be presented by the

foreman either in person or through his authorised agent

(2) The Registrar shall retain one copy of the chit agreement and return the duplicate to the foreman with an endorsement that the chit agreement has been registered:

7. Endorsement of registration of a chit.- The endorsement of

registration of a chit agreement to be issued by the Assistant Registrar shall

be in Form III.

8. Minimum capital requirements for the commencement, etc., of a chit, and chit, and creation of a reserve fund by a company.- a company shall not commence or carry on chit business unless it has a paid-up capital of not less than rupees one lakh. (3) Every company carrying on chit business shall create and maintain a reserve fund and shall, out of the balance of profit of each year as disclosed in its profit and loss account and before any dividend on its shares is declared, transfer to such reserve fund, a sum equal to not less than ten per cent, of such profit.

(4) No company shall appropriate any sum or sums from the reserve fund except with the prior approval of the Registrar and for the purpose of obtaining such approval, it shall an application in the prescribed form to the Registrar explaining the circumstances relating to such appropriation.

10. Application for appropriation of any sum from the reserve fund .-

Every application for obtaining prior approval of the Registrar for

appropriation of any sum by a company from the reserve fund shall be in

Form IV

9. Commencement of chit.- (1) Every foreman shall, after all the tickets specified in the chit agreement are fully subscribed, file a declaration to that effect with the Registrar

11. Declaration to be filed about subscriptions to all tickets of a chit .-

Every declaration to be filed by a foreman after all tickets in a chit specified

in the chit agreement have been fully subscribed shall be in Form V. A

correct and complete list of subscribers shall also be presented along with the

declaration for filing. The list shall conform to the entries in paragraph (10)

under item XIII of the chit agreement in Form VIII

(2) As soon as may be after a declaration is filed under sub-section (1), the Registrar shall, after satisfying himself that all the requirements relating to sanction, registration of chit and other matters have been duly complied with, grant a certificate of commencement to the foreman.

12. Form of Certificate of commencement of Chit .- The Certificate of

commencement of a chit to be granted to the foreman shall be in Form VI

(3) No foreman shall commence any auction or the draw of any chit or appropriate any chit or appropriate any chit amount unless a certificate of commencement referred to in sub-section (2) is obtained by him.

10. Copies of chit agreement to be given to subscribers.- (1) A foreman shall, as soon as may be after he has obtained the certificate of commencement under sub-section (2) of section 9, but not later than the date of the first draw of the chit, furnish to every subscriber, a copy of the chit agreement certified to be a true copy. (2)A foreman shall, within fifteen days after the close of the month in which the draw for the first

installment of the chit is held, file with the Registrar, a certificate to the effect that the provisions of sub-section (1) have been complied with.

11. Use of the words chit, chit fund, chitty or kuri.- (1) No person shall carry on chit business unless he uses as part of his name any of the words "chit fund", "chitty" or "Kuri" and no person other than a person carrying on chit business shall use as part of his name any such word. (2) Where at the commencement of this Act,- (a) any person is carrying on chit business without using as part of his name any of the words specified in sub-section (1); or (b) any person not carrying on chit business is using any such word as part of his name, he shall, within a period of one year from such commencement, add as part of his name any such word or, as the case may be, delete such word from his name: Provided that the State Government may, if it considers it necessary in the public interest or for avoiding any hardship, extend the said period of one year by such further period or periods not exceeding one year in the aggregate.

12. Prohibition of transacting business other than chit business by a company.- (1) Except with the general or special permission of the State Government, no company carrying on chit business shall conduct any other business. (2) Where at the commencement of this Act, any company is carrying on any business in addition to chit business, it shall wind up such other business before the expiry of a period of three years from such commencement: Provided that the State Government may, if it considers it necessary in the public interest or for avoiding any hardship, extend the said period of three years by such further period or periods not exceeding two years in the aggregate.

13. Aggregate amount of chits.- (1) No foreman, other than a firm or other association of individuals of a company or co-operative society, shall commence or conduct chits, the aggregate chit amount of which at any time exceeds twenty-five thousand rupees. (2) Where the foreman is a firm or other association of individuals, the aggregate chit amount of the chit conducted by the firm or other association shall not at any time exceed,- (a) where the number of partners of the firm or the individuals constituting the association is not less than four, a sum of rupees one lakh; (b) in any other case, a sum calculated on the basis of twenty-five thousand rupees with respect to each partner or individual. (3) Where the foreman is a company or co-operative society, the aggregate chit amount of the chits conducted by it shall not at any time exceed ten times the net owned funds of the company or the co-operative society, as the case may be. Explanation.- For the purposes of this sub-section, "net owned funds" shall mean the aggregate of the paid-up capital and free reserves as disclosed in the last audited balance sheet of the company or co-operative society, as reduced by the amount of accumulated balance of loss, deferred revenue, expenditure and other intangible assets, if any, as disclosed in the said balance sheet.

14. Utilisation of funds.- (1) No person carrying on chit business shall utilise the moneys collected in respect of such business (other than commission or remuneration payable to such person or interest or penalty, if any, received from a defaulting subscriber), except for- (a) carrying on chit business; or (b) giving loans and advances to non-prized subscribers on the security of subscriptions paid by them; or (c) investing in trustee securities within the meaning of section 20 of the Indian Trusts Act, 1882; or (d) making deposits with approved banks mentioned in the chit agreement. (2) Where any person carrying on chit business has utilised the moneys collected in respect of such business before the commencement of this Act, otherwise than for the purposes specified in sub-section (1), he shall secure that so much of such moneys as have not been realised before such commencement

are realised before the expiry of a period of three years from such commencement: Provided that the State Government may, if it considers it necessary in the public interest of for avoiding any hardship, extend the said period of three years by such further period or periods not exceeding one year in the aggregate.

15. Alteration of chit agreement.- A chit agreement shall not be altered, added to or cancelled except with the consent in writing of the foreman and all the subscribers to the chit.

16. Date, time and place of conducting chits.- (1) Every draw in a chit shall be held on the date, at the time and place mentioned in the chit agreement and a notice therefore in such form and in such manner as may be prescribed shall be issued by the foreman to all the subscribers. (2) Every such draw shall be conducted in accordance with the provisions of the chit agreement and in the presence of not less than two subscribers. (3) Where any draw was not conducted on the ground that two subscribers required to be present at a draw under sub-section (2) were not present or on any other ground, the Registrar may, on his own motion or on an application made by the foreman or any of the subscribers, direct that the draw shall be conducted in his presence or in the presence of any person deputed by him.

17. Minutes of proceedings.- (1) The minutes of the proceedings of every draw shall be prepared and entered in a book to be kept for that purpose immediately after the closure of the draw and shall be signed by the foreman, the prized subscribers, if present, or their authorised agents, and at least two other subscribers who are present, and where a direction has been made under sub-section (3) of section 16, also by the Registrar or the person deputed by him under that sub-section. (2) The minutes referred to in sub-section (1) shall state clearly- (a) the date and hour when proceedings began and ended and the place where the draw was held; (b) the number of the installment of the chit to which the proceedings relate; (c) the names of the subscribers present; (d) the person or persons who become entitled to the prize amount in the installment; (e) the amount of discount; (f) full particulars regarding the disposal of the unpaid prize amount, if any, in respect of any previous installment; and (g) any other particulars that may be prescribed.

18. Copies of minutes to be filed with Registrar.- A true copy of the minutes of the proceedings of every draw certified as such by the foreman shall be filed by the foreman with the Registrar within twenty-one days from the date of the draw to which it relates.

19. Restriction on opening of new place and business.- (1) No person carrying on chit business shall open a new place of business without obtaining the prior approval of the Registrar within whose territorial jurisdiction his registered office of, as the case may be, the place or the principal place of business is situated. (2) Before granting approval under sub-section (1), the Registrar shall consult the Registrar of the State within whose territorial jurisdiction the new place of business is proposed to be opened and shall also keep in view the financial condition and methods of operation of the foreman, the extent to which public interest will be served by the opening of the new place of business and such other matters as may be prescribed. (3) Where a person carrying on chit business opens a new place of business in a State other than the State (hereinafter referred to as the State of origin) in which his registered office or the place or the principal place of his business is situated, the Registrar of the State in which such new place of business is opened may also exercise and perform any of the powers and functions which the Registrar of the State of origin may exercise and perform in respect of the chit business carried on at such new place of business.

(4) For the purposes of this section, "place of business" shall include any branch office, sub-office, or any place of business where the chit business may be conducted by such person.

FORM I

[See section 4(2) and rule 4)

(Application by a Foreman for obtaining previous sanction to commence or

conduct a chit)

Place :

Date :

From

……………………………….

……………………………….

……………………………….

Pincode-……………………………….

(e-mail address and phone numbers if any)

To

The Deputy Registrar of Chits

……………………………….

OR

(The authorized officer by designation)

……………………………......………

(Through the Assistant Registrar of Chits)

Sir,

I…………………………… son/wife/daughter of

…………....................................... *...............................……… (here state

profession or occupation) residing at

………................................………………./We, the Chairman and Secretary

respectively on behalf of **.............................................................................

(name of the firm, company, co-operative society etc.) situate at/having its

registered office at ………………………….. desire to commence and

conduct a chit as foreman at

………………...........................................................……….. (here specify the

place with postal address in detail). Full particulars in this regard are given in

the Annexure hereto.

2. A certified true copy of the resolution passed by the Managing

Committee/Board of Directors at its meeting held on ….....…………….. for

commencing and conducting the chit in question is enclosed. We are also

enclosing 3 copies each of the audited balance sheet for the last year/ for the

year ended…………………………………… and a statement of account for

the remaining period certified as correct by our auditors M/s.

……………...........................………. /by the Assistant Registrar of Cooperative

Societies, ………………………………………

3. I/We remit herewith a sum of Rs. …………………. (Rupees.

……………………………………………………….. only) being the fees

prescribed for the purpose.

4. I/We hereby certify that the aggregate Chit amount of the Chits run

by me/us is Rs.……………………….. (Rupees.

…………………………………………........……........….. only) on the date

of this application and does not exceed the aggregate chit amount prescribed

by Section 13 of the Chit Funds Act, 1982 (Central Act 40 of 1982).

5. I/We request you to accord your sanction for commending and

conducting the Chit. On receipt of such sanction further steps for registration,

etc., of the chit will be taken.

Yours faithfully,

Chairman

Secretary

For and on behalf of

Encls: sheets.

Strike out or delete whatever is not applicable.

* Insert the designation as may be appropriate to the applicant.

** Here enter the name of the applicant institution, if any.

ANNEXURE

Statement of particulars

1. Name and address of

theCompany/Association

ofindividuals/Co-

operativesociety/partnership/sole

proprietorship (address of the

registered office as well as the

Head Office/Administrative

Office, if any, should be given)

2. Constitution ie., whether

incorporation

asCompany/Cooperative society

or registered/unregistered

association of individuals/

partnership/sole proprietorship

(Also specify the provision of

the Act under which

incorporated/registered along

with the date of incorporation/

registration)

3. Names and addresses of the

branches/offices, if any

4. Main objects of the institution

(enclose a copy of the

memorandum and articles of

association or as the case may

be, of the Bye-laws or Rules

regulating the activities of the

institution).

5. Names, occupations and

residential addresses of the

Directors or as the case may

be, of the promoters/members

of the committee of

management/partners etc.

6. Names and residential

addresses of the Chief

Executive Officer and two

other Officers immediately

next to him, in the managerial

set up.

7. Name of the bankers and their

addresses.

I/We solemnly declare that the facts stated herein

as also in the enclosures are

true to the best of my/our knowledge, information

and belief.

Dated this …………………….. day of

…………………… 20………

at ………………………………..

Name(s)

Signature(s)

Designation(s)

For and on behalf of

*……………………………………………………

.

* Here enter the name of the applicant institution,

if any.

Strike out whatever is not applicable.

Note : (i) If the space against any item is

inadequate for furnishing

full particulars, the required information should be

given in

separate sheets indicating the cross reference

against the

relative item of this statement.

(ii) A copy each of the latest available audited balance sheet and

profit and loss account, if any, should be attached.

8. Name of the auditors and their

addresses.

9. Particulars of the chit(s) to be

started (such as the chit

amount, duration of the chit,

frequency of the draws, manner

of draws, etc. – Also attach a

copy of the draft of the chit

agreement to be entered into

with the subscribers).

10. Places where the chit

schemes

are proposed to be conducted.

11. Names and addresses of the

associate companies/cooperative

societies/associations

of individuals/partnerships/sole

proprietorships.

12. Names, occupations and

residential addresses of the

Directors or as the case may

be, of the promoters/members

of the committee of

management etc., of the

institution(s) referred to in item

11.

FORM II

Application for registration of the chit agreement

[See section 7 (1) and rule (6)]

Place :

Date :

To

The Assistant Registrar of Chits,

…………………………………

…………………………………

Dear Sir,

I. (a). I ......………………………….. son of Shri.

………………………. Being the foreman conducting chit under the name

and style of................................…………………………………………… at

.............................................................………………………… or

…………………………………………………………………………………

……....................................................................................................

……………………………………..………………………………………

(b).We …………………..........………………………………….………

………………… the Chairman and Secretary respectively of the foreman

conducting chit business under the name and style of

……………..................................................………………….. at

……………………………… hereby apply for registration of the chit

agreement.

2. The Chit agreement in duplicate is attached herewith together with a sum

of Rs. …………………… being the registration fees as required under the

Kerala Chit Funds Rules, 2012.

3. The number of current chits which are running as on the date of his

application is ……………………… and the agreement chit amount of these

chits involved therein is Rs. ……………………………. which is within the

limits specified in section 13 of the Chit Funds Act, 1982 (Central Act 40 of

1982).

4. A certified true copy of the sanction obtained under section 4 of the above

Act for commencement or conduct of the chit in question is enclosed.

5. ......................

Yours faithfully,

Chairman

Secretary

Name

Designation(s)

For and on behalf of foreman *......

* Here enter the name of the applicant institution, if any.

Strike out or delete whatever is not applicable. Insert the

designation(s) as may be appropriate to the applicant.

FORM III

[See section 7(2) and rule 7]

Endorsement of Registration

Presented in the office of the Assistant Registrar of Chits

…………………. at ……… a.m/p.m on this the ………………….. day of

20 …… by ………………………………………….. son of ……………

aged ………… years, residing at ………………………. the foreman / the

duly constituted agent of ………………………….. the foreman of this

proposed chit, authorised as per power of attorney (details of power of

attorney to be given)

Signature of foreman/agent

I hereby certify that this chit agreement relating to the chit proposed to be

conducted by …………………….............................................…… (the name

and address of the foreman should be filled in here) as a foreman has this

………………………. day of …………………….20……………… been

registered by me under sub-section (2) of section 7 of the Chit Funds Act,

1982 (Central Act 40 of 1982) as Chit No. …………… of 20 ……

Given under my hand and seal this …………………………… day of

…………………….. 20 ……..… at ………………………………………

(Seal) Signature of Assistant Registrar of Chits

FORM IV

[See section 8(4) and rule 10]

Application by a company for appropriation of money from the reserve fund

Place :

Date :

The Registrar of Chits,

………………………..

……………………….

Dear Sir,

In terms of sub-section (4) of section 8 of the Chit Funds Act 1982

(Central Act 40 of 1982) we hereby seek your approval for appropriating a

sum of Rs.……………/- (Rupees. (in words)

……………………………………………………. only) by withdrawal from

the Reserve Fund of the company. This withdrawal has been necessitated by

the following circumstance (Here state the circumstance under which

withdrawal from the Reserve Fund has become necessary).

2. We enclosed for your information a copy of each of the profit and loss

account and the balance sheet for the last two accounting years as also a

proforma of the balance sheet and profit and loss account for the current year

ended …………………….. 20 ………….. A true copy of the resolution

passed by the Managing Committee/Board of Directors on the

………………………. for appropriation of the said sum from the Reserve

Fund is also enclosed. We shall be glad to furnish such further information as

may be required by you.

3. We remit herewith a sum of Rs.…………../- (Rupees

……………………………………………………………………) being the

fees prescribed for the purpose.

4. We shall be glad if you will kindly grant us permission to withdraw a sum

of Rs. ………………… from the Reserve Fund.

Yours faithfully,

Chairman

Secretary

* For and on behalf of foreman/company

* Here enter the name of the applicant/company

FORM V

[See section 9(1) and rule 11]

Declaration by foreman

Place :

Date :

The Assistant Registrar of Chits,

……………………….............

……………………….............

Dear Sir,

By your letter dated ……………………………………………..you were

pleased to grant me/us a certificate of registration to start a new chit of a chit

amount of Rs. …………………………………. and of a duration

…………………..months.

2. I/We have subsequently enlisted the required number of members and we

hereby declare in terms of sub-section (1) of section 9 of the Chit Funds Act,

1982 (Central Act 40 of 1982) that all the tickets specified in the chit

agreement have been fully subscribed. A list of subscribers is presented

herewith.

3. I/We remit herewith a sum of Rs.………………/- (Rupees (in words)

……………………………..............…………………..only) being the fees

prescribed for the purposed of filing this declaration.

Yours faithfully,

Chairman

Secretary

For and on behalf of foreman

Strike out or delete whatever is not applicable. Insert such designation(s) as

may be appropriate to the applicant.

FORM VI

[See section 9(2) and rule 12]

Certificate of commencement of chit

Place :

Date :

Office of the Assistant Registrar of Chits,

…………………..................……..

…………………...................…….

I hereby certify that *………………..…....……………… is entitled

to commence and conduct the chit

**.........…………………………………………………………… the chit

agreement in respect of which was registered in my office as chit No………..

of 20…………..

Given under my hand and seal, this

…………………………………… day of ………………….20..………….. at

………………………….

(Seal) Signature of Assistant Registrar

* Here enter the name of the foreman

** Here mention the chit amount and duration etc. of the chits

FORM VII

[See section 10(2) and rule 13]

Certificate about having furnished copy of chit agreement of the subscribers

Place :

Date :

The Assistant Registrar of Chits,

……………………...........…..

…............…………………….

Dear Sir,

The Chit Funds Act 1982

(Central Act 40 of 1982)

I/We ………………………………….. the foreman of the

chit/Chairman and Secretary on behalf of the foreman firm/company

conducting the chit, do hereby certify that I/We have furnished to every

subscriber of the chit a copy of the chit agreement bearing registration

number ………………. of 20…....….. having been registered in the office of

the Registrar of Chits, ……………………. duly certified by me/us to be a

true copy. The copies were furnished to each of the subscribers on

…………………………………..

The date of obtaining the certificate of commencement of the said chit

granted under sub-section (2) of section 9 is …………………………

The first draw of the said chit was held on ……………………

Yours faithfully,

Chairman

Secretary

For and on behalf of foreman

Strike out or delete whatever is not applicable. Insert the designation(s) as

may be appropriate to the applicant.

FORM VIII

[See section 6 and rule 14]

Form of chit agreement

(Articles of agreement between the foreman and the subscribers)

1. Office where the chit is registered :

2. Year and registered number : Year : No.:

3. Full name and address of foreman :

Pincode-

(e-mail address and phone

numbers if any)

4. Occupation (if applicable) :

5. Age (if applicable) :

I. Chit amount and number of tickets

(1) No. of tickets or fraction thereof

held by each subscriber Full

¾

½

¼

1/8

(2) No. of instalments and amount payable No. Amount (Rs.)

for each ticket at every instalments.

(3) Chit amount

II. Duration of the Chit

(1) Date of 1st instalment

(2) Dates of subsequent instalments

(3) No. of instalments per year

(4) Date of termination

(5) Duration of the chit Years Months

III. The place, time and probable date when the chit is to be

commenced.

(1) Place (give full particulars)

(2) Probable date

(3) Time of commencement of the proceedings.

IV. Particulars of security given or deposited by foreman.

(1) Under section 20 of the Act, the following security sufficient

to the satisfaction of the Registrar of Chits, the particulars of

which are described below, has been given for the proper

conduct of the chit (Here enter description of security such as

cash Government Security (immovable property) etc. (In case

immovable property has been charged, its particulars such as

its description/location/market value, No. and office of

registration of Security Bond etc. should be given).

(2) No. and date of the certificate of Registrar of Chits regarding

the sufficiency of security.

(3) The foreman shall not get release of the security in full until

all the liabilities under the chit are discharged.

V. Mode of conducting the chit.

(1) The subscriber who is to get the prize at any instalment shall

be determined by lot or by auction the time and place

specified in Article IIII. (Here specify the smallest fraction of

a tickets, the prize for which will be determined by lot or by

auction, and the time allowed for each purpose).

(2)Where the prize is to be determined by auction, a ticket or

fraction thereof shall be auctioned for a sum not less than the

chit amount minus foreman’s commission, and the subscriber

who bids for the highest discount not exceeding 30% of the

total amount of the chit shall be entitled to have it confirmed

in his name.

Note : Where a fraction of a ticket is auctioned, the

subscriber who bid it for the highest discount is

entitled to have confirmed in his name at the same

rate as many such fractions as he wished to bid.

(3) In cases where the subscribers are not prepared to bid any

ticket or fraction thereof or where the discount is not

sufficient to meet the foreman’s commission, the subscriber

who is entitled to the prize amount shall be determined by lot.

The subscriber so determined shall be deemed to be the prized

subscriber who shall be entitled to the chit amount for his

ticket less foreman’s commission for that ticket.

(4) A defaulter subscriber shall not be entitled to take part in the

proceedings.

(5) If for any reason the subscriber is unable to take part in the

proceedings, he may in writing authorise an agent in that

behalf. Such agent shall have all the rights and privileges of a

subscriber at such proceedings.

VI. Mode of payment of such instalment.

(1) Every subscriber shall on the date of each instalment pay to

the foreman the amount due for his ticket for each such

instalment and get a receipt in that behalf from the foreman.

(2) In the case of a prized subscriber, if the amount due from him

for a particular instalment is not paid on the date of that

instalment, it shall be paid within (here mention weeks or

months) with interest at (here specify the rate) failing which it

shall be competent to the foreman to realise from the

…………………………………………………………………

…………………………………………………………………

..defaulter in a lump all the future subscription due from him

together with the interest due thereon and other incidental

expenses.

(3) In the case of a non-prized subscriber, if the amount due from

him for a particular instalment is not paid on the date of that

instalment, it shall be paid within (here mention weeks or

months) with interest at (here specify the rate) failing which it

shall be open to the foreman to remove him from the list of

subscribers and have another person substituted for such

defaulter subscriber. The foreman shall duly inform the

defaulter subscriber of the action taken against him.

Note : (i) Under clauses (2) and (3) the period within which the

amount shall be paid and the rate at which interest due thereon

shall be paid may be such as shall not be inconsistent with the

provisions of the Act or any law for the time being in force.

(ii) The rate of interest payable by a defaulting subscriber in

pursuance of the proviso to section 28(1) of the Act shall not

exceed 12 per cent per annum.

(4) A non-prized defaulting subscriber shall be entitled to the

amount paid by him and the discount due to him on his

executing an acknowledgement in writing at the time the

substituted subscriber draws the prize amount. If the defaulter

subscriber fails to obtain the amount due to him, the foreman

shall deposit the same in the approved bank. If the foreman

fails to pay such subscriber, the amount due to him on the due

date, it shall be competent for such subscriber to realise such

amount with interest permissible under the law for the time

being in force.

VII. Procedure for receiving the prize amount by a prized subscriber.

(1) A prized subscriber or his nominee shall receive from the

foreman the prize amount within .............................(here

specify the period) after furnishing to the satisfaction of the

foreman sufficient security, for the payment of future

subscriptions.

(2) In case the prized subscriber or his nominee fails to receive

the prize amount after furnishing sufficient security, the

foreman shall deposit the amount in the approved bank and

inform the prized subscriber of that fact.

(3) In case the amount so deposited is not sufficient for the

payment of future subscriptions, it shall be competent to the

foreman to realise from such prized subscriber such amount as

may be deficient together with the interest due thereon and all

other incidental charges.

(4) In case there remains any portion of the amount deposited

after paying the future subscriptions and other charges such

portion shall be payable by the foreman to the prized

subscriber after the termination of the chit, failing which it

shall be competent to the prized subscriber or his nominee to

realise from the foreman such portion as remains together with

the interest due thereon from the date of termination of the

chit.

(5) If at any time after the prize amount is deposited in an

approved bank, the prized subscriber or his nominee furnished

sufficient security, the foreman shall withdraw the amount so

deposited and pay it to the prized subscriber or his nominee

after deducting there from the amount due from him for the

payment of the instalments prior to the date on which the

security is furnished.

(6) If the foreman fails to pay the prize amount to the prized

subscriber or his nominee furnished sufficient security it shall

be competent to such subscriber or nominee to realise from

the foreman the prize amount together with the interest due

thereon from the date of furnishing such security.

VIII. Disbursement of discount.

The discount for every ticket auctioned shall be

distributed equally between the prized and non-prized subscribers

after deducting there from the foreman’s commission.

IX. Foreman’s commission and the instalment at which the foreman is to

get the prize.

(1) (Here specify the date and number of instalment at which the

foreman is to get the prize). First and the last instalment not

being subject to auction, the subscribers shall be liable to pay

the full amount of their tickets.

(2) Here specify the rate per cent of foreman’s commission and

the total amount of commission chargeable on the chit

amount.

Note : Any other amount agreed to by the subscribers for any

other purpose may also be specified here.

X. Transfer how to be effected.

(1) It shall not be competent to any subscriber to transfer his

rights in a chit except with the consent in writing of the

foreman, provided that no such consent shall be necessary in

the case of transfer by a subscriber whose name has been

removed by the foreman from the list of subscribers for

default of payment of subscriptions. The transferee (whether

he is already a subscriber or not) shall be entitled to no more

rights than the transferor had in the chit in respect of the ticket

or fraction thereof transferred.

(2) No transfer of the rights of a foreman to receive subscriptions

from the prised subscriber shall be made without the previous

sanction in writing of the Registrar of Chits. Any such

transfer shall, if it defeats or delays a non-prized subscriber,

be avoidable at the instance of such subscriber.

XI. Balance sheet and subscriber’s right to examine chit records.

(1) On termination of a chit, the foreman shall prepare balance

sheet containing a summary of the assets and liabilities of the

chit and giving such particulars as will disclose the nature of

assets and liabilities and how the value of the assets has been

arrived at. Such balance sheet shall be made available for

auditing by the auditors specified in rule 29 and a certificate of

such auditing shall be received by the foreman and kept by

him.

(2) The foreman shall make available for examination by the

subscribers all the chit records on all the dates of the draw

between ............................... (here specify the time).

XII. Banks where chit money may be deposited.

(Here specify the name of the approved bank(s) where the

foreman proposes to deposit chit money)

XIII. Miscellaneous

(1) The subscriber who gets his prize at the last instalment shall

be entitled to the chit amount less the foreman’s commission.

The foreman shall pay up such amount within (here specify

the period) after the date of termination of the chit filing

which the prised subscriber shall be competent to realise the

amount from the foreman together with the interest due

thereon from the date aforesaid.

(2) Any amount due to the foreman from any subscriber on

account of the chit shall be a first charge on the subscriptions

paid by such subscribers. Similarly, the security and all chit

money’s deposited by the foreman shall be liable for a

discharging any amount due from the foreman to the

subscribers.

(3) Receipts shall be granted for all payments by the foreman to

the subscribers or by the subscribers to the foreman.

(4) The chit amount shall in no case be enhanced, but if

necessary it may be reduced.

(5) The foreman shall convene a meeting on the registration in

writing of not less than 25 per cent of the number of nonprized

and unpaid prized subscribers for making any alteration

in the chit agreement not inconsistent with the provisions of

the Act and the Rules made there under.

(6) If, for any default of the foreman, the conduct of the chit is

not continued, the foreman shall pay to the non-prized

subscribers their contributions including discount within (here

specify the period) failing which it shall competent to such

subscribers to realise the amount together with the interest due

thereon from the foreman or from all or any of the following

assets.

(a) The security given or deposited by the

foreman;

(b) Other properties belonging to the foreman;

(c) The future subscriptions due to the foreman

from the prised subscribers.

(7) In case where the foreman holds tickets as an ordinary

subscriber in addition to the ticket of which he is entitled to

the prize without deduction of the discount he shall not have

any more rights or privileges than the other subscribers have

in the chit. When the foreman bids such tickets, he shall

furnish sufficient security for the payment of future

subscriptions as required by the Act and the rules made there

under.

(8) If before the termination of the chit, the foreman dies or

otherwise becomes unable to conduct the chit.

(i) Here specify the arrangements made for the conduct of

the chit.

(ii) In such a case any one or more of the non-prized

subscribers authorised by a special resolution may, in

the absence of any provision in this chit agreement for

the future conduct of the chit, take the place of the

foreman and have the right to continue the chit or to

make suitable arrangements for the future conduct of

the chit.

(9) Here specify any other provisions that may be agreed to such

as payment of interest or penalty, if any, payable for any

default in the payment of stipulated instalments, etc.

(10) The subscribers who have affixed their signature hereunder

agreed to the above articles.

Sl No.

Name and

full

address of

subscriber

No. of

tickets

taken

Subscribers

signature &

date

Name and full

address

(with age and

father’s/husband’s

name) of the

nominee of the

subscriber

Name,

signature

and address

of witness

1.

2.

3.

4.

.

*Note: The particulars under paragraph (10) shall be filled up at the time of

enrolment of subscribers

FORM IX

[See section 16 and rule 17]

Notice to subscribers of Chit Number .......................... of 20.........

Sir,

This is to inform you that the ..................................................... draw in

monthly/quarterly/half yearly/yearly chit No................................20............... in

which you are one of the subscribers will be held on ........................day

................................. (month), 20.......... at ...................a.m./p.m at

........................................................................ (address). You may kindly make

it convenient to be present at the draw in person or by your duly authorized

agent.

Yours faithfully,

Secretary

For and on behalf of foreman

Strike out or delete whatever is not applicable. Insert such designation(s) as

may be appropriate.

FORM X

[See section 20 and rule 20 (1)]

Application for certificate of sufficiency of security for conducting a chit

To

The Assistant Registrar of Chits,

…………………………………

…………………………………

Dear Sir,

I/We propose to commence and conduct a chit within your jurisdiction.

A copy of the chit agreement of the proposed chit is attached herewith. The

other particulars are give below.

1. Name and address of the applicant

2. Age and occupation

3. Chit amount

4. Details of security offered.

A. In the case of securities other than immovable property.

(i) Cash security (Give full details

regarding the deposit in the

approved bank in the name of

the Assistant Registrar of chits)

(ii) Government Security (Give full

details of the Government

securities transferred in favour of

the Assistant Registrar of Chits)

(iii) Other immovable securities

(Give full description)

B. In the case of security of immovable property

(i) Give a brief description of the property as follows :

District :

Sub-district :

Taluk :

Firka :

Village :

Kara/Muri/Desom :

Survey number :

Area :

(ii) Full description (vide detailed schedule of property attached).

(iii)Rights of the foreman over the property.

(iv)Market value of the property.

(v) Full details of prior encumbrances, if any, on the property.

5. Details of other movable and immovable

properties belonging solely to the foreman.

6. Whether the applicant has any debt

and if so, the amount of such debt.

7. Whether the foreman has conducted

any chit before and if so, whether

there is any subsisting liability under

the same.

* I am/we are appending herewith :-

(i) The encumbrance certificate for the last

thirty years, and

(ii) The following title deeds relating to the

property, (give details of the title deeds)

The information and particulars furnished herein are true and correct to

the best of my/our knowledge, information and belief.

The security may kindly be accepted.

Yours faithfully,

Place :

Date : Foreman

* Applicable only in the case of immovable property.

Column 4 (A) or (B) may be struck off where it is not applicable.

FORM XI

[See section 20 and Rule 20 (12) (a)]

Certificate of sufficiency of security

No. Office of the Assistant Registrar of Chits,

.................................................................

Date :

(In the case of cash)

I hereby certify that I am satisfied that

........................................................................................................ (Name and

address of the foreman) has/have deposited an amount of Rs...................

(Rupees................................................................................................ only (in

words)) in the......................................................................................... (Name of

the approved bank) on....................................(date) in my name in Account

No............................. for a term of ......................... years .........................

months as security for the proper conduct of the chit proposed to be

commenced by him/them from ............................... with a chit amount of

Rs......................... and that he has/they have delivered the said deposit

receipts/Pass book No............................ to me this the

......................................................day of 20................ and that the said security

is adequate and acceptable under section 20 of the Chit Funds Act, 1982

(Central Act 40 of 1982).

(Seal) Assistant Registrar of Chits,

..............................................

(In the case of Government security/other movable securities)

I hereby certify that..............................................................................

(Name and address of the foreman) has transferred the following Govt.

securities/(other movable securities) in my favour on ............................. (date)

as security for the proper conduct of the chit proposed to be commenced by

him/them from ..............with a chit amount of Rs....................

(Rupees......................................................................................................only)

and that the said security is adequate and acceptable under section 20 of the

Chit Funds Act, 1982 (Central Act 40 of 1982). Details of Govt.

securities/other movable securities. (Give full particulars of the securities

here).

(Seal) Assistant Registrar of Chits,

..............................................

(In the case of immovable properties as security)

I hereby certify that..............................................................................

has/have executed a security bond in my favour on ............................. (date)

charging the following immovable properties as security for the proper conduct

of the chit proposed to be commenced by him/them from ...................with a

chit amount of Rs....................

(Rupees......................................................................................................only)

that the document has been registered as No. ................................... of

20................. of Sub-Registry Office, ....................................................... and

that I am satisfied as to the value of the property and title of the said foreman to

the property and that the said security is adequate and acceptable under section

20 of the Chit Funds Act, 1982 (Central Act 40 of 1982).

Schedule of properties

(Seal) Assistant Registrar of Chits,

..............................................

FORM XII

[See section 20(3) and rule 22 (1)]

Application for the substitution of the security

Place :

Date :

To

The Assistant Registrar of Chits,

…………………………………

…………………………………

Dear Sir,

I/We propose to give the undernoted security in substitution of the

original security for proper conduct of the chit for the commencement of

which certificate had been granted by you (vide No...................................

dated...............................................................................................)

Certain other particulars are also given below:-

1. Name of foreman :

2. Age and occupation if the foreman :

is not a firm or a company.

3. The office in which the Chit agreement

of the chit has been registered and the :

number and year of registration

4. Chit amount :

5. Details of the original security given :

6. Details of all movable and immovable

properties belonging solely to the :

applicant.

7. Whether the applicant has any debt and

if so, the amount of any such debt and :

to whom they are due. 62

8. Details of Government security/other

securities offered as substituted :

security.

I/We hereby declare that the information and particulars furnished

herein are true and correct to the best of my/our knowledge, information and

belief.

Yours faithfully,

Chairman

Secretary

Signature(s)

For and on behalf of.......................

Note : Strike out/delete whatever is not applicable. Insert the designation as

may be appropriate to the applicant.

FORM XIII

[See section 23 and rule 27 (1)]

Form of Register of subscribers to be maintained

Office where the chit agreement of the chit is registered

..........................................................................................................

The registration number and year of registration number and year of

registration of chit agreement of the chit ..........................................................

Chit

Subscriber

Assignment Substitution

Ser

ial

Nu

mb

er a

cco

rdin

g t

o c

hit

ag

reem

ent

Nam

e an

d a

dd

ress

of

the

sub

scri

ber

Dat

e o

f si

gn

ing

th

e ch

it a

gre

emen

t

D

ate

of

rece

ipt

of

the

cop

y o

f th

e ch

it

agre

emen

t by

th

e su

bsc

rib

er

N

um

ber

of

tick

ets

Am

ou

nt

Nam

e an

d a

dd

ress

of

the

assi

gn

ee

Dat

e o

f as

sig

nm

ent

Nu

mb

er a

nd

fra

ctio

n o

f ti

cket

s

Am

ou

nt

Dat

e o

n w

hic

h t

he

fore

man

rec

og

nis

ed t

he

assi

gn

men

t

R

easo

n f

or

the

rem

ov

al o

f th

e su

bsc

rib

er

Dat

e o

f re

mov

al

Nam

e an

d a

dd

ress

of

the

sub

stit

ute

d

sub

scri

ber

Dat

e o

f su

bst

itu

tio

n

Nu

mb

er a

nd

fra

ctio

n o

f ti

cket

s

Am

ou

nt

(Rs)

Dat

e o

f in

tim

atio

n o

f th

e re

-sub

stit

uti

on

to

th

e

rem

ov

ed s

ub

scri

ber

Rem

arks

(1) (2) (3) (4) (5) (6) (7) (8) (9) (1

0)

(11

)

(12) (1

3)

(14) (15

)

(16

)

(17

)

(18

)

(19)

FORM XIV

[See section 23 and rule 27 (2)]

Form of the Ledger to be maintained

Office where the chit agreement of the chit is registered

..........................................................................................................

Registration number of the chit agreement........................................................

Section I : Receipts and payment in respect of subscriber

Number of subscriber :

Name of subscriber :

Number of tickets taken :

Chit amount :

Ledger

Am

ou

nt

Pai

d b

y

Su

bsc

rib

e

r Sig

nat

ure

of

the

Rem

ark

s

Dat

e

Nu

mber

of

inst

alm

en

t On

wh

at

acco

un

t

rece

ived

or

pai

d

by

th

e

fore

man

Am

ou

nt

of

sub

scri

pti

on

fo

r

each

inst

alm

en

t Div

iden

d

du

e to

th

e

sub

scri

be

r fo

r ea

ch

inst

alm

en

t (R

s.)

Sh

are

amo

unt

Inte

rest

Am

ou

nt

rece

ived

bac

k b

y

sub

scri

be

r Gen

eral

nu

mb

er

in t

he

day

bo

ok

Su

bsc

rib

e

r Fo

rem

an

1 2 3 4 5 6 7 8 9 10 11 12

Section II :

Deposit and withdrawal account of the foreman ..............................................

Name of the bank in which money is

deposited............................................................

Dat

e

Fo

r w

hat

pu

rpo

se

dep

osi

ted

or

wit

hd

raw

n Am

ou

nt

dep

osi

ted

(Rs.

)

Inte

rest

occ

urr

ing

(Rs.

)

Bal

ance

afte

r ea

ch

tran

sact

io

n (

Rs.

)

Am

ou

nt

wit

hd

raw

n (

Rs.

)

Bal

ance

(Rs.

)

Nu

mb

er

in t

he

day

bo

ok

Sig

nat

ure

of

the

fore

man

Rem

ark

s

1 2 3 4 5 6 7 8 9 10

FORM XV

[See section 23 and rule 27 (3)]

Form of the day book to be maintained

Office where the chit agreement of the chit is registered

..........................................................................................................

Registration number of the chit agreement........................................................

Day book

Recepts

Expenditure

Dat

e

Gen

eral

Num

ber

On w

hat

acc

ount

rece

ived

or

pai

d

Subsc

ripti

ons

(Rs.

)

Inte

rest

(R

s.)

Wit

hdra

wal

fro

m

ban

k (

Rs.

)

Oth

er i

tem

s

Tota

l R

ecei

pts

(R

s.)

Ref

eren

ce t

o r

ecei

pt

in t

he

rece

ipt

book

Am

ount

pai

d t

o

subsc

riber

(R

s.)

Fore

man

’s

Com

mis

sions

(Rs.

)

Dep

osi

t in

the

ban

k

(Rs.

)

Oth

er i

tem

s (R

s.)

Tota

l E

xpen

dit

ure

(Rs.

)

Bal

ance

(R

s.)

Ref

eren

ce t

o t

he

pag

e

num

ber

of

the

vouch

er i

n t

he

file

of

of

vouch

ers

Sig

nat

ure

of

fore

man

Rem

arks

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Note :

1) The balance should be struck in column (15) at the close of each day.

The monthly total of receipts and expenditure shall be struck at the end

of each month.

2) In column (2) each transaction shall be assigned a serial number. There

shall be one separate set of serial numbers for each calendar year.

3) If any amount is received from or paid to more than one subscriber at a

time the amount paid to or received from each subscriber should be

entered as a separate item.

4) If more than one amount is received from or paid to the subscriber at a

time each amount paid to or received from the subscriber should be

entered as separate item.

FORM XVI

[See section 23 and rule 27 (4)]

Form of the Receipt book to be maintained

Original Receipts Serial Number

Received from ................................ to the credit of .............................

the amounts detailed below in respect of the chit agreement registered under

number ..................................... of ........................20..........

Rs. Ps.

Payment for current instalment :

Arrears of subscription (with details) :

Penalty for overdue subscription :

Fees for inspection of records :

Other receipts(to be specified) :

----------------------

Total

============

(Rupees. (in words) ...............................Paise.............................)

Date :

For and on behalf of Foreman

Note : Strike out/delete whatever is not applicable. Insert the designation(s)

as may be appropriate to the applicant.

FORM XVII

[See section 64 and rule 47]

Application for reference of a dispute to arbitration

Before

The Registrar

1. Name : Age :

Occupation : Address :

2. Name : Age :

Occupation : Address : Disputants

3. Name : Age :

Occupation : Address :

Versus

1. Name : Age :

Occupation Address :

2. Name : Age :

Occupation : Address : Opponents

3. Name : Age :

Occupation : Address :

(Here give full particulars of the claim or the facts of the case

constituting the cause of action, when it arose etc.)

The disputant/disputants prays/pray as under :

.................................................................................................................

................................................................................................................

In support of the above claim or relief sought I/We enclose documents

and papers as per the list annexed here to.

Date : (Signed)

Disputant/Disputants.

I we .................................. disputant/disputants declare that the facts state

above are true to the best of may/our knowledge and belief.

Date : (Signed)

1)

2) Disputants

3)

Filed in the office of ............................................ on ...................20...............

Note :

1) In case there are more disputants or opponents their name, addresses,

ages and occupations should also be mentioned.

2) In disputes relating to monetary claims, the disputants should state the

precise amount claimed but where this cannot be exactly ascertained the

disputants shall state the approximate amount claimed.

3) When the disputants – foreman is a company/co-operative society or a

partnership firm, a copy of the resolution of its Board of Directors or the

Managing Committee as the case may be, shall accompany the

application.

FORM XVIII

[See section 71 and rule 56]

Proclamation to be issued at the time of the issue of a certificate

A. In the case of immovable property :

Whereas Shri................................................... obtained an

award under section 69 of the Chit Funds Act, 1982 (Central Act 40 of

1982) for an amount of Rs....................... against ............................

(Judgement debtor) and proposes to execute the same by sale of the

under mentioned property of the said judgements-debtor and whereas the

holder of the award has obtained certificate dated ............................. for

execution of the award under section 71 of the said Act.

Notice is hereby given that any private transfer or delivery of, or

encumbrance or charge on, the property made or created after the issue

of the certificate shall be null and void against the said holder of the

award under section 72 of the Act aforesaid.

Description of the property

Date of

award of

order

Names of the

parties against

whom award

or order has

been passed

and

certificate

under

section 71 has

Survey

number

or

House

number

Name

of the

Village

or town

etc

Area

Assessment

or other

taxes

Other

description

or the

property

such as

boundaries

etc

Remarks

been issued

1 2 3 4 5 6 7 8

The notice shall be proclaimed at some place on or adjacent to

such property by beat of drum or other customary mode, and a copy of the said

notice shall be fixed on a conspicuous part of the property and upon a

conspicuous part of the village office and also where the property is land

paying revenue to the State Government, in the Office of the Collector of the

District in which the land is situated.

Place :

Date : Registrar of Chits

B. In the case of movable property a similar notice may be given with

necessary changes as to the description of the property.

A copy of the notice shall be delivered to the judgementdebtor.

FORM XIX

[See rule 58 (5)]

Certificate for Transfer of Property

A. In the case of immovable property :

WHEREAS in execution of the award made under section 69

of the Chit Funds Act, 1982 (Central Act 40 of 1982) in favour of

......................... an order was passed on the ..................... day of

...............................20.......... for sale of the under mentioned property of

the person or persons (debtor or debtors); 72

And whereas the Court/the Collector/the Registrar is satisfied

that the said property cannot be sold for want of buyers;

It is here by ordered that the right, title and interest of the

debtor in the said property shall vest in the holder of the award on order

and shall be delivered to him subject to the terms and conditions laid

down in the schedule here to annexed.

Description of the property

Survey

Number

Area and

assessment

Nature of

right, title

and

interest

Details of

encumbrances

to

which

of the

defaulter

property is

subject.

1 2 3 4

The Schedule

The property is transferred to the holder of the award on order in

full/partial satisfaction of the amount due to him from the debtor.

Given under my hand and seal of the Court/Collector /Registrar

this ............................................. day of ..................................20............

Place :

Date : Court/Collector/Registrar of Chits

B. In the case of movable property :

(The form shall be similar with necessary changes as regards the

description and the delivery of the property).

FORM XX

[See section 17(1) and (2) and rule 18]

Form of minutes of proceedings

1. Registered number and year of the chit and office of Registration

No.............of 20 of the office of the Assistant Registrar of chits

2. The number of instalment in respect of which proceedings are conducted.

3. Place where the proceedings are conducted.

4. Date and time when the proceedings began.

5. The names of the subscribers present.

6. Full particulars regarding the disposal of the prize amount in respect of

the immediately preceding instalment.

7. (a) In the case where the prize amount was disbursed to the subscriber

(including payments under the first proviso to section 22(1)).

(b) In the case of deposit of prize amount in an approved bank under

section 22 (2).

(c) In the case of deposits of amounts deducted from prize amount

towards future subscriptions as per the second proviso to section

22 (1) and consolidated payments as per section 33(4).

(d) In the case of deposits made under section 30(1).

8. Full particulars of the disposal of any unpaid prize amount in respect of

any previous instalment (excepting those referred to in column 6 above).

9. Amount withdrawn from the approved bank since the date of last draw

and the purpose of such withdrawal.

10. How the prized subscriber was determined and full particulars in regard

to auction/lot etc., relating to the whole ticket if the ascertainment of the

prize winner related to a fraction.

11. Full particulars in respect of the chit amount, commission, dividend,

prize amount etc., the name of prize winners with ticket numbers and

their signatures.

12.Signature of the foreman.

13.Time when the proceedings ended.

Note : Full particulars such as the ticket number and name of the subscriber,

name of the approved bank, Account number, date of payment,

deposit/withdrawal, details of security, documents etc., wherever

applicable shall be distinctly shown in columns 6 to 9.

FORM XX A

[See sub-rule (d) of rule 2]

Form of letter of authority)

I ............................................... (name) who/am/is............................................

(designation) of M/s. ............................................................ being a foreman of

the chit series No........................................registered under registration

No.............................hereby appoint Shri. ...................................................... as

my authorised representative to attend on my/our/behalf in the matters

connected with the above chit to produce accounts and documents and to

receive on my/our/behalf any notice or document issued and to take all

necessary steps in the matter.

The said Shri............................................... is also hereby authorised to

act on my behalf/ behalf of the said............................... in the said matter.

I/We agree to ratify all acts done by the said Shri. ..............................in

pursuance of this authority.

Place : Signature :

Date : Status :

FORM XXI

[See rule 63 (1)]

Register of records of chits

Office of the Assistant Registrar of Chits

Part-I

1. No. and date of previous sanction with

the name of authority who sanctioned

the chit.

2. No. and date of sufficiency of security

3. Details of security

4. Nature of chit

5. (a) Amount of chit

(b) No. of tickets and No. of division

of each ticket.

6. (a) Date of commencement

(b) Date of termination

(c) Duration

7. No. of instalments and date of each

instalment

8. Registered No. and year of chit

9. No. and date of issue of certificate of

commencement

Signature of Head Ministerial Officer

Signature of Assistant Registrar

Part-II Sl.

No Name of

record

file

Date of

origin

Due date

of filing

Actual

date

of filing

Fees

levied

Initials of

the

H.M.O

Initials

of D.R

Remarks

1 2 3 4 5 6 7 8 9

Note : 1. Whenever any event which has a bearing on the chit takes place

Suitable entries regarding that event shall be made in the remarks

column.

2. Necessary entries shall be made in Column 9 regarding termination

or winding up of a chit.

FORM XXII

[See rule 63 (2) (a)]

Register of securities offered under Section 20(1) of the Chit Funds Act, 1982.

Office of the Registrar of Chits,

.................................................

1. Name and full address of the foreman :

2. Name of the chit fund and location of office :

3. Nature of chit (i.e, whether cash chit or grain

chit)

:

4. (i) Chit amount :

(ii) Proposed dates of commencement and :

termination.

(iii) Number of instalments and periodicity

and date of each instalment :

5. Nature of security offered :

6. Full particulars of security furnished :

7. (a) Whether the security is accepted :

(b) If so the number and date of certificate

of sufficiency of security issued :

(c) If not, the reasons for refusal and whether

the security has been retransferred to the :

foreman and if retransferred when and how.

Signature of Head Ministerial Officer

Signature of Registrar

8. (a) Details of previous sanction if accorded. :

(b) Number and date of registration of chit

agreement if any :

9. Number and date of certificate of

commencement if issued. :

Signature of Head Ministerial Officer

Signature of Registrar 78

10. Number and date of the Government Gazette

in which release notification is published. :

11. Summary details of objections if any

received after publication of release :

notification and its disposal.

12. Name and signature of the foreman with date

in token of having received back the security:

13. Remarks :

Signature of Head Ministerial Officer

Signature of Assistant Registrar

Note : (i) Column 1 to 7 shall be filled up as soon as an application is

disposed of.

(ii) The total number of instalments, the frequency, i.e., whether

weekly, monthly etc., and dates of instalment shall be given

in column 4 (iii).

(iii) The particulars such as amount, date of deposit, name of

approved bank, account number (receipt number of pass

book number etc.) etc., in the case of cash deposit, all

relevant particulars in the case of other Govt. securities and a

brief description of property with number of security bond

and office of registration in the case of immovable property

should be given in column 6.

FORM XXIII

[See rule 63 (2) (b)]

Register of fees realised on account of Chits

Office of the ............................

Dat

e

Sl.

No.

Reg

iste

red N

o.

of

Chit

Fee

for

insp

ecti

on o

f im

movab

le p

roper

ty

off

ered

as

secu

rity

.

Fee

for

appli

cati

on f

or

pre

vio

us

sanct

ion

under

sec

tion 4

(1)

Fee

for

fili

ng a

chit

agre

emen

t under

sect

ion 7

(1)

Fee

for

fili

ng d

ecla

rati

on u

nder

sec

tion

9(1

)

Fee

for

issu

e of

cert

ific

ate

of

com

men

cem

ent

under

sec

tion 9

(2)

Fee

for

fili

ng o

f re

cord

s

Fee

for

audit

of

bal

ance

shee

t /i

nsp

ecti

on

of

chit

s

Fee

for

insp

ecti

on o

f ch

it r

ecord

s

Fee

for

issu

e of

cert

ifie

d c

opie

s of

chit

reco

rds

Fee

for

com

poundin

g o

f off

ence

s

Any f

ee r

eali

sed o

ther

than

those

men

tioned

in c

olu

mns

(4 t

o 1

3)

Fee

rec

eipt

No.

Rem

arks

Init

ial

of

Reg

istr

ar

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Note : Explanatory note wherever necessary shall be given in the remarks

column.

FORM XXIV

[See rule 63 (2) (c)]

Register of fees collected for compounding offences under the

Chit Funds Act, 1982.

Office of the .........................................

In the case

of returns

or records

In the case

of amounts

Dat

e

Sl.

No.

Reg

iste

red N

o. of

Chit

Nat

ure

of

off

ence

Dat

e of

ori

gin

of

the

retu

rn o

r

reco

rds

Due

dat

e of

fili

ng

Dat

e of

the

even

t w

ith r

efer

ence

to

whic

h t

he

due

dat

e is

to b

e re

ckoned

Las

t due

dat

e fo

r pay

men

t dep

osi

t et

c.

Act

ual

dat

e of

fili

ng o

r re

cord

s/pay

men

ts/

dep

osi

t of

cash

in a

ppro

ved

ban

k

Len

gth

of

del

ay i

n d

ays

(if

appli

cable

)

Num

ber

and d

ate

of

noti

ce t

o t

he

fore

man

Dat

e of

rece

ipt

of

the

fore

man

’s r

eply

Num

ber

and d

ate

of

rep

ort

to t

he

Reg

istr

ar

Num

ber

and d

ate

of

ord

er o

f th

e R

egis

trar

Com

poundin

g f

ee l

evie

d

Rem

arks

Init

ial

of

Hea

d M

inis

teri

al O

ffic

er

In

itia

l of

Reg

istr

ar

1 2 3 4 5 5(a) 6 6(

a)

7 8 9 1

0

11 12 13 1

4

1

5

16

Note : Offences compounded after institution of prosecution shall also be

entered in this register.

FORM XXV

[See rule 63 (2) (d)]

Register of Prosecution

Office of the Registrar of Chits....................................

Year................ Sl.

No.

Chit

No Details of

occurrence

of offence

Date of

occurrence

of offence

No. and

date

of report

seeking

sanction

for

prosecution

No. and

date of

sanction

of

prosecution

and the

authority

who

gave

sanction

Date of

filing

and

No. of

the

case

and

name

of Court

Summary

of

the

decision

of the

Court

Remarks

1 2 3 4 5 6 7 8 9

Note : (i) In filling up Column 3, the concerned sections of the Act shall

also be quoted.

(ii) The date from which the act or omission is reckoned as offence

may be given in column 4.

FORM XXVI

[See rule 63 (3)]

Register of application for previous sanction to commencement or conduct of

Chits

Office of the ............................

Year..........................................

Sl

.

No.

Dat

e

of

rece

ip

t of

appli

c

atio

n

The

off

icer

who

has

forw

ar

ded

the

appli

c

atio

n

for

pre

vio

us

sanct

i

on

Nam

e

and

full

addre

s

s of

the

appli

c

ant

Nat

ur

e an

d

Chit

as

amo

u

nt

of

the

pro

po

sed

chit

Proposed

date of

No. of

inst

al

men

ts

and

pro

po

sed

dat

e

of

each

inst

al

men

t

and

per

iod

icit

y.

Det

ail

s of

secu

rit

y

off

ere

d Cer

tifi

cate

of

suff

ici

ency

of

secu

rit

y

Det

ails

of

dec

isio

n

(i.e

.,

sanct

ion

or

refu

sal)

Sig

nat

ur

e of

sanct

ioni

ng

auth

ori

ty

Rem

arks

Co

mm

enc

emen

t

Ter

min

ati

on

1 2 3 4 5 6 7 8 9 10 11 12

FORM XXVII

[See rule 63 (4)]

Register of Prosecutions sanctioned under the Chit Funds Act 1982

Office of the.............................

Year..........................................

Sl.

No.

The

Off

icer

who h

as

report

ed t

he

off

ence

and

sought

sanct

ion f

or

pro

secu

tion a

nd N

o.

and

dat

e of

his

rep

ort

Nat

ure

of

off

ence

(sum

mar

y d

etai

ls)

Dat

e of

rece

ipt

of

the

report

No.

and d

ate

of

ord

er i

f

pro

secu

tion i

s sa

nct

ioned

If p

rose

cuti

on i

s not

sanct

ioned

the

reas

ons

ther

efore

Rem

arks

Dat

ed s

ignat

ure

of

the

auth

ori

ty t

o s

anct

ion

Pro

secu

tion

1 2 3 4 5 6 7 8

FORM XXVIII

(See rule 30 (2)]

Name of the foreman..............................

(i) Office where the bye-laws of the

Chit are registered

(i) Registration number and year

of the bye-laws of the Chit.

(ii) Date of which the balance sheet

was prepared

(ii) Name of the Foreman

(iii) Number of instalments conducted (iii) Chit amounts

till date of balance sheet (iv) Number of instalments

I. RECEIPTS AND EXPENDITURE

Receipt

Current

Year

Rs. Ps.

Total

including

previous

year

Rs. Ps.

Expenditure

Current

year

Rs. Ps.

Total

including

previous

year

Rs. Ps.

1. Subscriptions paid by the

prized and non-prized

1. Prize amounts

disbursed to prized

subscribers

2. Receipts under dividend

2. Interest paid to

subscribers

3. Interest realised from the

subscribers

3. Amounts paid to

defaulter non-prized

subscribers

4. Contributions by

substituted or assigned

non-prized subscribers in

respect of dues of

defaulters

4. Amount contributed

by foreman for

payment for the prize

amount

5. Any other amount

received from subscribers

5. Foreman’s

commission

6. Amount contributed by

the foreman for payment

of prize amount

6. Amounts on account

of interest realised for

delayed payments and

forfeited dividend

7. Interest accrued from

investments

7. Dividend paid

8. Other items (details to be

annexed)

8. Sinking fund

9. Investments withdrawn

9. Other items (details to

be annexed)

Total Expenditure

10. Investments made

Grand Total

Grand Total

II. STATEMENT OF ASSETS AND LIABILTIES

Assets Rs. Ps.

Liabilities

Rs. Ps.

1. Amounts due on account

of

arrears of subscription due

from prized subscribers

1. Amounts paid by non-

prized

subscribers (including

dividend)

2. Amounts due from the

subscribers including the

foreman towards future

subscriptions.

2. Amounts due to non-

prized

defaulter subscribers

3. Interest due from

defaulter

subscribers

3. Arrears of prize amount

due to

prized subscribers.

4. Investments in bank

(including interest thereon)

4. The amounts due to the

foreman towards

contributions

made by him for payment

of

prize amount.

5. Other items

(details to be annexed)

5. Other items

(details to be annexed)

6. Sinking fund

6. Sinking fund

Total

Total

III. DETAILS OF INVESTMENTS

Sl.

No.

Receipts

Rs. Ps.

1. Investments made on account of the failure on the part of

prized subscribers to receive the prized amount due to

them.

2. Investment made on account of lump-sum collection

made

from defaulter prized subscribers.

3. Amount deposited for payment to non-prized defaulter

subscribers.

4. Investments on account of other item of receipts of the

chit

(details to be annexed)

Total

IV. ASSESSMENT OF VALUE OF INVESTMENT

1. Investment in Pass Book Account Number.

2. *Amount due from the future instalments of the Chit as per bonds etc.

obtained for instalments of the Chit including the arrears of Rs ................

due on account of defaulting instalments from defaulters.

3. Balance of contributions due from the foreman on account of prize amount

received by him.

Note : To facilitate audit of balance sheets, the following statements of details

should be annexed by the Foreman to the balance sheet.

(i) Statement of details of receipts and expenditure for each

instalments.

(ii) Of disbursement

(iii) Of the prize amount in respect of each instalment, and

(iv) Statement of details of arrears due on the date of the preparation of

the balance sheet from the prized and non-prized subscribers.

*Particulars of documents to be entered here.

Security offered by the Foreman, hypothecation bonds etc. executed under

section 20, and hypothecation bonds etc. obtained from the prized subscribers

under section 31 of the Act.

V. CERTIFICATE BY FOREMAN

I certify that the above accounts have been prepared correctly and that

they contain a true and complete statement of the affairs of the chit.

Date : Name and Signature of the Foreman 88

VI. CERTIFICATE BY AUDITOR

Certified that I have examined the chit books and records maintained in

respect of the chit ......................... the bye-laws of which have been registered

in ................................................. as number .............................

20............conducted by Foreman .............................................................. and

have verified the entries in the accounts with the books. The accounts are

drawn up in conformity with the provisions of the Chit Funds Act, 1982

(Central Act 40 of 1982) and the Rules framed thereunder.

Date : Name and Signature of the Auditor 89

APPENDIX II

FORM I

[See section 62, 63 and rule 31 and 44]

Rs. Ps.

I. For the inspection of immovable property proposed to be

offered as security under section 20.

25.00

II. For the application for previous sanction to commence or

conduct a chit under sub-section (2) of section 4.

25.00

III. For filing a chit agreement under sub-section (1) of section 7. 10.00

IV. For issue a certificate of commencement of chit business under

sub-section (2) of section 9.

(a) Where the chit amount of the proposed chit does not

exceed Rs.5,000/-

10.00

(b) Where the chit amount of the proposed chit exceeds

Rs.5,000/- but does not exceed Rs.10,000/-

25.00

(c) Where the chit amount of the proposed chit exceeds

Rs.10,000/- but does not exceed Rs.15,000/-

50.00

(d) Where the chit amount of the proposed chit exceeds

Rs.15,000/- but does not exceed Rs.20,000/-

100.00

(e) Where the chit amount of the proposed chit exceeds

Rs.20,000/- but does not exceed Rs.25,000/-

150.00

(f) Where the chit amount of the proposed chit exceeds

Rs.25,000/- but does not exceed Rs.1 lakh

250.00

(g) In any other case 750.00

V. For filing a certificate under sub-section (2) of section 10 2.00

VI. For filing a copy of the minutes of proceedings under section

17.

2.00

VII. For every application for registration of an alteration, addition

or omission of any provisions in a chit agreement under subrule

(1) of rule 15

10.00

A fee of Rs.2/- (Rupees Two only) shall be levied in each case

for filing with the Registrar

(a) A copy of each entry relating to the removal of

defaulting subscriber under sub-section (3) of section 28.

VIII.

(b) A true copy of each entry relating to the substitution of a

subscriber under sub-section (2) of section 29. 90

(c) A true copy of entry relating to transfer of the rights of

foreman under section 37.

(d) A copy of entry relating to transfer of non-prized

subscriber’s right under section 37.

(e) A true copy of assent of non-prized subscribers and

unpaid prized subscribers of withdrawal a foreman under

section 41.

(f) A true copy of consent of all non-prized or unpaid prized

subscribers to the termination of chit under section 41.

(g) Each petition protesting against or objecting to the orders

passed or proposed to be passed by the Registrar.

If the balance sheet is audited under section 24 or the chit

books and records are inspected by the Registrar or any

Officer authorized by the Registrar under section 46 or the

accounts books and other records of the chit are audited by the

Chit Auditor, for each such audit or inspection.

(a) Where the chit amount does not exceed Rs.5,000/- 25.00

(b) Where the chit amount exceeds Rs.5,000/- but does not

exceed Rs.15,000/-

60.00

(c) Where the chit amount exceeds Rs.15,000/- but does not

exceed Rs.25,000/-

120.00

(d) Where the chit amount exceeds Rs.25,000/- but does not

exceed Rs.50,000/-

200.00

(e) Where the chit amount exceeds Rs.50,000/- but does not

exceed Rs. One lakh.

500.00

IX.

(f) In any other case 1000.00

X For each inspection of the records of a chit under section 62 3.00

XI For every 100 words or fraction thereof of a copy or extract of

the records relating to a chit furnished under section 62

1.00

XII For every 100 words or fraction thereof of certified copy of

any order, or award made by the Registrar or his nominee,

under section 69

1.00

XIII For every appeal to the State Government under section 74. 10.00

By order of the Governor

A.AJITH KUMAR

Secretary to Government. 91

Explanatory Note

(This does not form part of the notification, but is intended to indicate its

general purport)

Sub-section (1) of section 89 of the Chit Funds Act, 1982 (Central Act

40 of 1982) empowers the State Government to make rules in consultation with

the Reserve Bank of India for giving effect to the provisions of the said Act.

The State Government have decided to make rules accordingly.

The notification is intended to achieve the above object

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