Section 14 of The Chit Funds Act, 1982 in hindi
Utilisation of funds.
- (1)No person carrying on chit business shall utilise the moneys collected in respect of such business (other than commission or remuneration payable to such person or interest or penalty, if any, received from a defaulting subscriber), except for--
- (a)carrying on chit business; or
- (b)giving loans and advances to non-prized subscribers on the security of subscriptions paid by them; or
- (c)investing in trustee securities within the meaning of section 20 of the Indian Trusts Act, 1882 (2 of 1882); or
- (d)making deposits with approved banks mentioned in the chit agreement.
- (2)Where any person carrying on chit business has utilised the moneys collected in respect of such business before the commencement of this Act, otherwise than for the purposes specified in sub-section (1), he shall secure that so much of such moneys as have not been realised before such commencement are realised before the expiry of a period of three years from such commencement: Provided that the State Government may, if it considers it necessary in the public interest or for avoiding any hardship, extend the said period of three years by such further period or periods not exceeding one year in the aggregate.
Summary
- A person conducting chit business must not use the money collected from subscribers for any purpose other than specific permitted uses.
- Permitted uses of collected funds include carrying on the chit business and giving loans or advances to non-prized subscribers against the security of their paid subscriptions.
- Permitted investments include trustee securities defined under section 20 of the Indian Trusts Act, 1882, and making deposits with approved banks specified in the chit agreement.
- The foreman's personal commission, remuneration, and any interest or penalty collected from defaulting subscribers are excluded from these strict utilization limits.
- If chit funds were used for unapproved purposes before the Act started, the foreman must recover and realize those funds within three years of the Act's commencement.
- The State Government has the power to extend this three-year recovery period by a maximum of one additional year in the public interest or to avoid hardship.
Practical examples
FAQ
1. How can money from a chit business be used under Section 14 of the 1982 Act?
Section 14 of the 1982 Act states that money collected from the chit business can only be used for running the business, giving loans to members who have not yet won, buying safe government securities, or keeping it in approved banks.
2. Can a foreman give loans using chit funds under Section 14 of the Chit Funds Act, 1982?
Yes, Section 14 of the Chit Funds Act, 1982 allows the foreman to give loans and advances to non prized subscribers, which means members who have not yet won a draw, as long as it is secured by the money they already paid in.
3. What was the time limit to fix the use of funds under Section 14 of the Chit Funds Act?
If money was used for other reasons before the law started, Section 14 of the Chit Funds Act required it to be fixed within three years, though the State Government could add one more year if needed.
Test yourself
1.Under Section 14 of The Chit Funds Act, 1982, which of the following is a permitted use of the subscription moneys collected in the course of chit business?
2.Under Section 14 of The Chit Funds Act, 1982, what category of subscribers can receive loans and advances from the collected chit funds?
3.Under Section 14 of The Chit Funds Act, 1982, which of the following collected amounts is exempt from the strict utilization restrictions?
4.Under Section 14 and Section 20 of The Chit Funds Act, 1982, how do the investment options for collected chit funds relate to the security requirements of the foreman?