Legal
The Chit Funds Act, 1982
The law that governs chit funds in India, in plain language.
What the Act is
The Chit Funds Act, 1982 (Central Act 40 of 1982) regulates chit funds across India. Each state government runs it through a Registrar of Chits. In Tamil Nadu, the rules framed by the Government of Tamil Nadu also apply.
How the Act protects members
- Registration first: every chit group must be sanctioned and registered with the Registrar before it starts.
- Security deposit: the foreman must deposit security with the Registrar before a chit is registered.
- A written agreement: every member signs a chit agreement that sets out the terms, and gets a copy.
- Open auctions: auctions are held with at least two members present and recorded in signed minutes. The 2019 amendment also allows members to take part by video conference.
- A cap on the discount: the auction discount can’t exceed 40% of the chit amount (Section 6(3), raised from 30% by the 2001 amendment).
- A cap on commission: the foreman’s commission can’t exceed 7% of the chit amount (Section 21, raised from 5% by the 2019 amendment). RANM charges 5%.
- Accounts on record: the foreman files auction minutes and balance sheets with the Registrar.
Your rights as a member
- A copy of the chit agreement you sign.
- Your share of the dividend from every auction.
- The chit amount after you win an auction, once you give security for your future instalments.
- Access to the records of your chit.
How RANM follows the Act
RANM Chit Funds (P) Ltd. is registered under the Act. Every one of our chit groups is run under the Act and the Tamil Nadu rules. See our company registration details.
This is a summary for information, not legal advice. You can read the full Act on the Government of India’s India Code website by searching for “Chit Funds Act, 1982”.
