CHITTY ACT & RULES
Implications In KSFE
AFTER KSFE FORMATION
Formation of KSFE -06-11-1969
Travancore chitties Act in Travancore Area
Cochin Curies Act & Starting of Cochin Curies (Restriction) Act in Cochin Area
No Act in Malabar Area
The Kerala Chitties Act,1975 -25-08-1975
The Kerala Chitties Rules, 1975
The Chit Funds Act,1982 -20-08-1982
Amendments in 2001 & 2018
The Kerala Chit Fund Rules,2012 -05-06-2012
(As per G.O.No.94/2012/TD dt 04-06-2012)
Amendments in 2013, 2015 & 2016
.
Application for obtaining previous sanction to commence or conduct of chit (In form No. I)
By foreman to The District Registrar(Deputy Registrar of respective districts)
Filing fee:- Rs. 25/- for each chit
Duration of previous sanction
12 months from the date of such sanction
In KSFE this is done at Head office level
As per HO ref no. 12401 dt 15-04-2013, all branches are hereby instructed to remit the previous sanction fee Rs. 25/- at the time of registration, if not already remitted.
Advertisement (Sec. 5)
No person shall issue any notice, circular, prospectus, proposal or other documents inviting the public to subscribe for tickets in any chit, unless it contains
Previous sanction order &
Particulars of previous sanction
(Ref: Cir no.29/2012 dt 21/06/2012)
Compounding fee- Rs. 5000/-
Chit agreement
Every chit agreement as far as may be confirm to the preforma set forth in form no VIII. (Sec. 6 & Rule 14)
Every chit agreement shall be filed in duplicate with the ARC.
ARC retains the duplicate in stamp paper worth Rs. 500/- and return the original in stamp paper worth Rs. 5% of the chit amount to the foreman.
Every application for registration of a chit agreement to be submitted by foreman to ARC shall be in form no II along with previous sanction order and its particulars.
Filing fee- Rs.10/-
Every chit agreement shall be presented by foreman either in person or through authorized agent. (Sec. 7(1) & Rule 6)
The endorsement of registration of chit agreement issued by ARC to foreman shall be in form no III. (Sec. 7(2) & Rule 7)
Filing of declaration in form no. V
Sec.9(1) & Rule 11
Every foreman shall file a declaration with ARC regarding the tickets are fully subscribed along with the following fees
Rs. 250/- If chit amount greater than Rs. 25000/- and up to and including Rs. 1 lakh
Rs. 750/- If the chit amount greater than Rs.1 lakh
Duration of filing time
Within 3 months from date of endorsement of registration
ARC grant a certificate of commencement in form no. VI to foreman. Sec. 9(2) & Rule 12
No foreman shall commence or conduct any draw or auction of any chit, unless Certificate of Commencement is obtained by him. Sec. 9 (3)
Compounding fee- Rs. 5000/-
Every foreman shall furnish a copy of registered chit agreement to every subscriber of a chit not later than first draw of the chit. Sec. 10(1)
Compounding fee- Rs. 1000/-
Every foreman shall file a certificate regarding sec. 10(1) along with Filing fee- Rs. 2/-. Sec. 10(2)
Within 15 th day of next month of first draw/auction month
Compounding fee- Rs. 1000/-
As per Kerala Chit Fund Amendment Rules, 2015 w.e.f
01-06-2015, not later than second draw of the chit
(Ref: Alert Note 1/2018 dt 8/03/2018)
Duration of chit
Shall not extend 5 years from date of commencement of chit. Sec. 6(2)
Exemption to KSFE- With State Government permission - 10 years
Amount of discount
Shall not exceed 30% of chit amount. Sec. 6(3)
Amendment- 40% as per amendment in 2001
No person shall carry on chit business unless he use the words chit, chit fund, chitty or kuri as a part of his name.
Sec. 11(1)
Exemption To KSFE
Prohibition of transacting other business by a company. Sec.12(1)
Exemption to KSFE
Permitted to do other line of business.
Aggregate amount of chits by a company is limited to 10 times the Net Owned Fund. Sec. 13(3)
Net owned fund = (Paid up Capital+FreeReserve)– ( Loss + Deferred Revenue Expenditure + Intangible Asset)
Aggregate amount of chits= 10x Net Owned Fund
Date, time and place of conducting chits
Every draw in a chit shall be held on the date, time and place mentioned in the chit agreement.
A notice regarding this shall be issued by the foreman to all the subscribers
Sec. 16(1)
Compounding fee – Rs. 3000/-
Auction
The prized subscriber at any installment to be determined by auction and if more than one person offer maximum discount, shall be determined by lot. Sec. 6(4)
Conduct the draw of any chit in the presence of minimum 2 numbers. Sec. 16(2)
If not 2 numbers, the draw shall be conducted in Registrar’ s presence or any person deputed by him. Sec. 16(3)
If the prized subscriber does not draw the prize amount within 2 months from the date of draw, foreman may conduct another draw in respect of such installment Sec. 22
For PBNP cases under CFA,1982, follow same procedure as KCA, 1975 (Ref: Cir No. 39/2016 dt 15/07/2016)
Filing of copy of minutes (Sec. 18 & Rule 18)
A true copy of the minutes of proceedings of every draw/auction certified by the foreman shall be filed with ARC in form no. XX
Duration of filing time
Within 21 days from the date of draw/ auction
Compounding Fee- Rs. 500/- for each minutes
Security for registration of new chit
(Sec. 20 & Rule 19 and 20)
Every foreman shall deposit an amount equal to chit amount in cash in an approved bank in the name of ARC as FD (Ref: G.O.(p) No. 210/2013/TD dt 18/12/2013)
In KSFE, deposit an amount equal to chit amount as FD in treasury in the name of ARC as security to the chitty (Ref: G.O.(p) No. 463/20012/TD dt 26/06/2012)
For NRI chits, an amount equal to chit amount in Government securities such as KIIFB bonds
For CSD’s in the name of ARC from 1-04-2017, we should claim the up to date interest dues and after all monthly & close those FD’s after termination
(Ref: Cir. No. 59/2017 dt 05/09/2017)
Payments
Demand sufficient security from the prized subscriber for due subscriptions and if it is furnished, the foreman shall bound to pay the prize amount
If the subscriber opts to avail prize amount after deduction of future subscriptions of chit, payment should be made within 7 days after the date of draw or before the next succeeding installment whichever is earlier
Every prize amount remains unpaid until the next succeeding installment , the foreman shall deposit such amount in separate bank account in an approved bank
Exemption to KSFE
Distribute among the subscribers the dividend either in cash, grain or by the way of adjustment towards the subscriptions payable for the next installment. Sec. 22
Compounding fee- Rs. 5000/-
Books, records to be kept by foreman (Sec. 23)
a) A Subscriber Register
b) A Minutes book
c) A ledger containing
1. The amount and date of payments by the subscribers
2. The amount and date of payments to the subscribers
3. The date and amount of deposits in an approved bank
d) A Security Deposit Register(Treasury Deposits)
e) Such books and registers prescribed by State Government.
Compounding fee- Rs. 2000/- for each records
BALANCE SHEET
1.As per Rule 30(1) KCFR, 2012
Part I - Form of Balance Sheet
Part II - Form of Profit and Loss account
Shall be filed within a period of 3 months from the expiry of each financial year.
On or before 30th June
Filing fee– Rs. 1000/- per year
2.As per Rule 30(2) KCFR, 2012
(Individual Chit Group)
Prepared in Form No. XXVIII and shall be filed within a period of 2 months from the termination of chit when the duration does not exceed 1 year.
If the duration exceeds 1 year, on expiry of every 12 months and also on the termination of chit.
Filing fee If the chit amount up to 25000 Rs. 120/-
,, >25000-50000 Rs. 200/-
,, >50000- 1 Lakh Rs. 500/-
,, > 1 Lakh Rs. 1000/-
Shall file the two balance sheets within the stipulated time.
(Sec.24 & Rule 30)
Compounding fee- Rs.500/- for each BS
(Ref: Cir no.34/2013 dt 19/06/2013)
Removal of defaulting subscribers
Remove the non prized defaulted subscribers from the list of subscribers .
A written notice of removal shall be given by the foreman to the defaulting subscriber
Duration-within 14 days from date of removal.
If he pays the defaulted installments with interest within 7 days of the date of receipt of such notice, his name shall be re-entered in the list of subscribers.
A true copy of every removal shall be filed by foreman with ARC. Sec.28(3)
Duration-within 14 days from the date of removal.
Filing fee- Rs.2/-
Compounding fee- Rs. 1000/-
Substitution of subscribers
A foreman may substitute any person in the place of defaulting subscriber who has been removed as per
sec. 28.
A true copy of every substitution shall be filed by foreman with ARC. Sec. 29(2)
Duration-within 14 days from the date of substitution.
Compounding fee- Rs. 1000/-
Amount due to the defaulting subscribers
Amount due to the removed subscriber (RSC) to be deposited in a separate account in an approved bank before the next succeeding installment. (Ref: Cir no.41/2013 dt 3/07/2013)
The amount so deposited shall be paid to the defaulting subscriber as and when he claims.
The contributions of any defaulting subscriber who has not been substituted till termination of chit, shall be paid to him within 15 days from the date of termination of chit. Sec. 30(3)
Compounding fee- Rs. 1000/-
Foreman to demand future subscriptions by written notice
A foreman shall not be entitled to claim a consolidated payment from a defaulting prized subscriber unless he makes a demand in writing.
All consolidated payments of future subscriptions realized by a foreman shall be deposited in an approved bank before the date of the succeeding installment
The amount so deposited shall not withdrawn except for payment of future subscriptions.Sec.33(4)
Compounding fee- Rs. 500/-
Preservation of chit records
For a period of 8 years from the date of termination of chit. Sec. 45
As per KCFR,2012 12 years from the date of termination of chit. Rule.62
Inspection of chit records
Allow non-prized and unpaid prized subscribers on all the dates of draw in foreman’s premises on payment of Rs. 5/- Sec 44
Allow the Registrar or any officer authorized by the State Government during working hours on any working day at the premises of the foreman without notice or
After 7 days notice in writing to foreman, direct him to produce for inspection such books and records at the time and place mentioned in the notice. Sec. 46
Compounding fee- Rs. 5000/-
Allow the Reserve Bank to inspect chit books and records at any time. (Sec. 47)
Documents to be submitted by KSFE Branches for Registration of new chit
Details of prior sanction
Two sets of chit agreements
(Original and Duplicate) in form no. VIII
Forms II, III, V, VI, VII, X & XI
Specified number of pass books
Address list
Treasury FD receipt (original)
Prescribed Fees
Up to and including chit amount 1 lakhs -- Rs. 287/-
Chit amount above 1 lakhs -- Rs.787/-
Stamp duty
For original chit agreement -- 5% of chit amount
For duplicate chit -- Rs. 500/-
On line chitty e-stamping (w.e.f 01-04-2018)
The instruments chargeable with stamp duty less than Rs. 1 lakhs shall be stamped with either impressed stamp or e-stamp
The instruments chargeable with stamp duty above Rs. 1 lakhs shall be stamped with e-stamp only
Pay stamp duty through website of Registration Department with user ID and password provided ( http://keralaregistration.gov.in)
The e-stamp certificate can be downloaded only once
The genuineness of e-stamp certificate can be verified through department portal (https://etreasury.kerala.gov.in) and defaced
The digital copy of e-stamp certificate provided in the website shall be the original e-stamp certificate
(Ref. G.O.(P) no. 23/2017/TD dt 07/04/2017)
Documents to be returned from SRO after registration of new chit
Form III - Endorsement or Certificate of Registration
Form VI - Certificate of commencement of chit
Form XI - Certificate regarding sufficiency of security
Original chit agreement bearing seal & signature of ARC
Pass books bearing seal of ARC
Fees receipts
Release of chitty security deposits
Documents to be submitted
Application for Gazette notification
Rs. 1800/- remitted original challan
w.e.from 1-04-2018 (Ref. Cir. No. 22/2018 dt 21/06/2018)
Two advertisement notices
Chelan should countersign by ARC
Advertisement notice must have place, date, seal and signature of ARC
Exemptions for NRI Chits Under CFA, 1982
Power to Exempt (Sec 87)
The State Government may in consultation with the Reserve Bank, by notification in the Official Gazette, exempt any person or class of persons or any chit or class of chits from all or any of the provisions of this Act.
Gazette notification no.227 dated 13-04-2015 by Government of India
NRI’s can also join chitties offered by KSFE
G.O.(MS) No. 136/2015/TD dated 29-07-2015 by Government of Kerala
Granted approval to KSFE for accepting subscriptions from NRI’s in chits in accordance with amendments made to the FEMA regulations
G.O.(P) No. 28/2018/TD dated 15-03-2018 by GOK
The GOK in consultation with RBI hereby exempt the chits conducted by KSFE for NRI’s from the following provisions of CFA, 1982
Punishments
If any one commence or conducts any chits against the provisions of CFA 1982, then action should be taken as per
Prized Chits And Money Circulation Schemes (Banning) Act, 1978
But not
Chit Fund Act, 1982