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Section 2 – The Prize Chits and Money Circulation Schemes (Banning) Act,1978

The Prize Chits and Money Circulation Schemes (Banning) Act,1978

Section 2. Definitions

In this Act, unless the context otherwise requires,-

(a) “Conventional chit” means a transaction whether called chit, chit fund, kuri or by any other name by or under which a person responsible for the conduct of the chit enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or certain quantity of grain instead) by way of periodical instalments for 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 provided for in the chit agreement, be entitled to a prize amount.]

Explanation. In this clause “prize amount” shall mean the amount, by whatever name called arrived at by deducting from out of the total amount paid or payable at each instalment by all the subscribers,

(i) The commission charged as service charges as a promoter or a foreman or an agent; and

(ii) Any sum which a subscriber agrees to forego, from out of the total subscriptions of each instalment, in consideration of the balance being paid to him;

(b) “Money” includes a cheque, postal order, demand draft, telegraphic transfer or money order;

(c) “Money circulation scheme” means any scheme, by whatever name called, for the making of quick or easy money, or for he receipt of any money or valuable thing as the conservation for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions;

(d) “Prescribed” means prescribed by rules made under this Act;

(e) “Prize chit” includes any transaction or arrangement by whatever name called under which a person collects whether as a promoter, foreman, agent or in any other capacity, monies in one lump sum or inn instalments by way of contributions or subscriptions or by sale of units, certificates or other instruments or in any other manner or as membership fees or admission fees or service charges to or in respect of any savings, mutual benefits, thrift, or any other scheme or arrangement by whatever me called, and utilizes the monies so collected or any part thereof or the income accruing from investment or other use of such monies for all or any of the following purposes, namely:-

(i) Giving or awarding periodically or otherwise to a specified number of subscribers as determined by lot, draw or in nay other manner, prizes or gifts in cash or in kind, whether or not the recipient of the prize of gift is under a liability to make any further payment in respect of such scheme or arrangement;

(ii) Refunding to the subscribers or such or them as have not won any prize or gift, the whole or part of the subscriptions, contributions or other monies collected, with our without any bonus, premium, interest or other advantage by whatever name called, on the termination of the scheme or arrangement or on or after the expiry of the period stipulated therein,

But does not include a conventional chit;

(f) “Reserve Bank” means the Reserve Bank of India constituted under the Reserve Bank of India act,1934 (2 of 1934).

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The Prize Chits and Money Circulation Schemes (Banning) Act,1978

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