A bill to raise the monetary limits for chit funds and higher commission for “foreman” was approved by Lok Sabha on Wednesday.
The Chit Funds (Amendment) Bill, 2019 also introduces words such as “fraternity fund”, “rotating savings” and “credit institution” to make chit funds more respectable, said Minister of State for Finance Anurag Thakur.
The maximum chit amount is proposed to raised from Rs 1 lakh to Rs 3 lakh for those managed by individuals or less than four partners, and from Rs 6 lakh to Rs 18 lakh for firms with four or more partners.
The maximum commission for foreman, who is responsible for managing the chit, is proposed to be raised from 5 per cent to 7 per cent.
The bill also allows the foreman a right to lien against the credit balance from subscribers.
The foreman denotes the person who is responsible to handle the chit fund process.