12 March 2009
Chit Funds Act, 1982 Section 2(b) of the Chit Fund Act, 1982 defines a chit as under:- "Chit means a transaction whether called chit, chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical installments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount. Explanation: - A transaction is not a chit within the meaning of this clause, if in such transaction,- (i) some alone, but not all, of the subscribers get the prize amount without any liability to pay future subscriptions; or (ii) all the subscribers get the chit amount by turns with a liability to pay future subscriptions."
INDIGENOUS BANKERS: Indigenous bankers are those who do not come under the control of RBI. For example money lenders, marvadis, chettiars, pawn brokers are known as indigenous bankers. They accept deposit and deal in Hundis (It is a credit instrument like promissory note.) The indigenous bankers rely on their own resources or borrow from one another to carry on their business. The following are their functions: 1) They receive deposits for a fixed period at a higher rate of interest. 2) They advance loans against security of and, jewellery, crops, goods promissory notes etc. 3) They write, sell and buy hundis, which are bills of exchange. 4) They finance both wholesale, and retail traders. 5) They engage in speculation of food and non-food. crops and other articles of consumption. 6) They act as commission agents to firms. 7) Some non-professional indigenous bankers run their own manufacturing or service firms 8) Some indigenous bankers provide long-term finance by subscribing shares and debentures of large companies. The borrowers find it easy to get finance from indigenous bankers because of the following reasons: 1) Less formality. 2) No fixed banking hours. 3) Borrowers approach them directly and informally.
Mutual Benefit Financial Company(MBFC) i.e., Nidhi Company
Any company which is notified by the Central Government as a Nidhi Company under section 620A of the Companies Act, 1956(1 of 1956)
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