Govt tightens norms for functioning of chit fund companies

Union Minister Ravi Shankar Prasad said the government approved amendment to tighten norms related to the functioning of chit fund companies.

The Union cabinet on Wednesday cleared an amendment to the Banning of Unregulated Deposit Schemes Bill 2018 that aims to tighten norms related to the functioning of chit fund companies and put in place a mechanism to compensate those defrauded by such schemes.

Union Minister Ravi Shankar Prasad said the government approved amendment to tighten norms related to the functioning of chit fund companies. (Vipin Kumar/HT PHOTO)

Law minister Ravi Shankar Prasad said the amendment was approved following recommendations by the standing committee on finance.

“The bill contains a substantive banning clause which bans deposit takers from promoting, operating, issuing advertisements or accepting deposits in any unregulated deposit scheme,” Prasad said.

The bill proposes to create three types of offences – running of unregulated deposit schemes, fraudulent default in regulated deposit schemes, and wrongful inducement in relation to unregulated deposit schemes.