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.
The bill has already been passed by the Lok Sabha.
Besides raising the monetary limit in collections, the Bill also provides for increasing commission for the person managing the fund to 7 per cent from 5 per cent.
As per the bill, the collection limit for individuals has been raised to Rs 3 lakh, up from the present Rs 1 lakh. For firms, the limit would be 18 lakhs from Rs 6 lakh now.
Introducing the bill in the Upper House, Minister of State for Finance Anurag Thakur said that the collection limit has been raised in view of inflation rate since 2001.
Chit funds are popular among low-income group people as it offers them the opportunity to save and invest. Alongside banks and other institutions, chit funds have played an important role in financial inclusion. It provides easy access to funds to the low-income group and small businesses.
The Chit Fund Act, 1982 was enacted to provide for regulation of chit funds which have conventionally satisfied the financial needs of the low-income households.
Replying to discussions over the bill, Anurag Thakur again stressed that chit funds are distinct from unregulated deposits and Ponzi schemes.