Cases of Voilation by Chit Fund Companies

Chit Funds are registered by the State Governments under the Chit Funds Act, 1982 – an Act administered by the Ministry of Finance but with responsibilities of implementation resting with the States. Cheating by Chit Fund company through fraudulent schemes is an offence under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978. The power to investigate and prosecute lies with the State Governments.

Insofar as Companies Act is concerned, cases of violations of the provisions of the Act by Chit Fund companies are dealt with in accordance with the Act. So far the Ministry has ordered investigations against 68 such companies by Serious Fraud Investigation Office (SFIO) under the provisions of Section 235 of the Companies Act, 1956. These investigations are in addition to action initiated by State Police Authorities under the laws referred above.

This was stated by Smt. Nirmala Sitharaman, MoS in the Ministry of Corporate Affairs in written reply to a question in the Rajya Sabha.