A group of people in a slum area of Kolkata decided to start a chit fund to assist the daily wage labour. As per the scheme, a member of the chit fund has to deposit ₹50 per day. On the last day of the month, the fund ca

The scheme described falls under the definition of a Chit Fund as per Section 2(b) of the Chit Funds Act, 1982, which defines a chit as: "A transaction where a person enters into an agreement with a group of individuals that every one of them shall subscribe a certain sum of money periodically and that each subscriber shall, in turn, be entitled to a prize amount determined by lot, auction or tender." However, following restrictions imposed by RBI on chit fund business- Chit fund business can be conducted only by a registered company. Running of Chit business by family and partnership firms are restricted. Chit companies must register with the Registrar of Chit Company in every state, furnishing full particulars about their chit company. The maximum discount that could be taken in a bid was restricted to 30% of the total chit amount. Details of each and every chit must be furnished to Reserve Bank of India along with the personal particulars of the subscribers. It is mandatory to keep one month's chit amount of all the subscribers/members with the Reserve Bank of India till the end of a particular chit. In view of this, except incorporation of Chit Company, in present case, the scheme cannot be registered with registrar of Chit Fund. In view of the above, The subscriber's opinion that the scheme should be registered with the Registrar of Chits is valid under the Chit Funds Act, 1982, provided the scheme is conducted by an entity eligible for registration.