Cabinet okays tabling of chit funds Bill in Parliament

New Delhi: The Union Cabinet on Wednesday approved introduction of the Chit Funds (Amendment) Bill, 2019 in Parliament to streamline the sector and reduce the regulatory or compliance burden of registered chit funds industry.

The Bill will also put in place mechanism to ensure transparency in chit fund schemes and protect subscribers.

Announcing the decision, Union Environment and Forest Minister Prakash Javadekar said the Bill was different from the one on unregulated deposits and banning of Ponzi schemes, cleared by Parliament recently.

“The Bill deals with regulated deposits taken through various chit fund schemes. The bill will strengthen regulations,” the Minister said.

On the tabling of the Bill, the Minister said the government would try to clear it in the current session itself.

Though the contents of the Bill were not available, sources said it was similar to the one introduced in the Lok Sabha early last year. It said at least two subscribers should be present either in person or through video-conferencing while opening chit bids. It also provided for hike in commission of foremen from 5 per cent to 7 per cent.

In another decision, the Cabinet approved signing of the UN Convention on International Settlement Agreements, scheduled on August 7, 2019 at Singapore or UN headquarters.

The signing of the convention will boost the investor confidence and shall provide a positive signal to foreign investors about India’s commitment to adhere to international practice on the alternative dispute resolution (ADR).

To encourage international commercial arbitration in India and to evolve a comprehensive ecosystem of arbitration, the government is establishing the New Delhi International Arbitration Centre (NDIAC) as a statutory body. The Commercial Courts Act, 2015, has been further amended and legislative exercise to further amend the Arbitration and Conciliation Act, 1996, is underway.

These initiatives are being taken with a view to encourage the settlement of commercial disputes, domestic and international, in India through ADR mechanism of arbitration, conciliation and mediation.