Which of the following statements about ‘Chit Fund’ in India is/are correct? 1. It is a kind of savings scheme 2. There are no Acts regulating the activities relating to Chit Funds in India Select the correct answer using the code given below :

A chit fund is a prominent type of savings scheme in India where participants contribute a fixed amount periodically into a common pool. It serves as a unique financial instrument that provides an alternative to traditional bank loans and savings accounts, particularly in rural and semi-urban areas. Regarding regulation, the second statement is incorrect because chit funds are strictly governed by the Chit Funds Act, 1982 [2]. This central legislation provides a comprehensive legal framework for the regulation of chit funds and matters connected therewith. While the Act is a central law, its implementation and oversight are managed by State Governments through the Registrar of Chits [1]. Registered chit funds must adhere to strict rules regarding fund security, reporting, and audits to protect participants from fraud. Therefore, only the first statement is correct.

Sources

1. [2] https://www.indiacode.nic.in/bitstream/123456789/21348/1/the_chit_funds_act%2C_1982.pdf
2. [1] https://sachet.rbi.org.in/Docs/0%C2%A5central%20ChitFundAct%201982.pdf