Chit Fund Federation opposes changes to Act

Federation demands companies be allowed to follow the existing procedure

The proposed ordinance to amend the State Chit Fund Act is being brought out keeping in view two major chit fund companies having a market share of 15 percent while small and medium companies holding 85 percent of the market are at a loss.

The AP Federation of Chit Funds president BS Prakasha Rao speaking to media on Monday said that the Ordinance was promulgated in September 2007 to bring in amendments in AP Chit Fund Act 1971 which would make cent percent security deposit mandatory. He said that chit fund companies were operating with 50 percent security deposit for the past 35 years but cent percent security largely effects the liquidity in the hands of the chit owner and in now way it safe guards the interests of the public.

The Federation Secretary General Ch Janardhana Reddy said that the important Amendment is regarding settlement of disputes by Registrar of Chits instead of Civil Courts. But, with the new amendment, chit fund companies have to go to the Registrar of Chits, where no manpower has been sanctioned and no specific guidelines issued to take up the cases. The Federation has demanded that chit fund companies should be allowed to follow the existing procedure up to the cut off date when Ordinance was promulgated without effecting the on flow of the business, he added.

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