The Hindu : Andhra Pradesh News : State mulls regulation of chit funds

Online edition of India's National Newspaper
Tuesday, Aug 31, 2004

Andhra Pradesh

Andhra Pradesh

State mulls regulation of chit funds

By V.N.Harinath

HYDERABAD, AUG. 30. The State Government is considering implementing the Central Chit fund Act but with changes to suit its needs. The Inspector-General of Registration and Stamps has prepared an eight-point action plan to achieve this objective, an official of the department told The Hindu on Monday.

The final decision on the implementation of the action plan is expected, if necessary, by setting up a Cabinet sub-committee shortly. A committee set up by the previous TDP Government had done preparatory work for making a comparative study of the both the Central and the State Acts to evolve comprehensive legislation.

Concrete steps soon

The issue was put on the back burner after the Telugu Desam lost power. Concrete steps are expected to be taken in the next three months. However, the official said the Government would keep the interests of thousands of organisers of chit funds in the State in view before finalising the act. The operation of more than 10,000 unauthorised chits is causing anxiety, besides the disputes arising out of the prolonged court cases.

It has become imperative to regulate the widespread chit fund business in the State in view of the fact that about 40 per cent of the population is said to depend on chit funds for meeting their financial requirements.

The State had enacted the AP Chit fund Act 1971 and regularised the business. Eleven years later the Union Government enacted the Central Chit fund Act 1982 taking into consideration the legislation implemented in various States. The Central Act is in force in most States barring two or three, Andhra Pradesh being one of them.

Central Act opposed

The Andhra Pradesh Federation of Chit funds is opposed to the Central Act as it believes that 75 per cent of the registered chit fund companies would and have to shut their business. It has represented to the Government saying that if the Central Act is to be enforced the companies would not be able to realise money in time from the defaulted subscribers through the Registrar of Chits. The federation also fears that the companies may not be able to pay the prize money to the subscribers.

A spokesman of the federation has suggested to the Government to strengthen the State Act, set up special courts for early realisation of the defaulted amounts and to take stringent action to curb unauthorised chit fund activities. Such steps would not only ensure safety of public money, but also bring in more revenue to the Government.

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