New Delhi | In a move to attract more foreign funds, the Reserve Bank of India has allowed the Non-Resident Indians (NRIs) to invest in chit funds without limit and on a non-repatriation basis.
However, the Registrar of Chits has to obtain permission from state government in accordance with the provisions of Chit Fund Act to allow any investment by NRIs.The subscription to the chit funds should be bought in through normal banking channel, through an account maintained with an Indian bank.
Earlier in May 2000, NRIs were barred from investing in a company engaged in the business of chit fund. Private chit funds have been surrounded by controversies over the past year.
Saradha chit fund scam and Rose Valley chit fund scam are some well-known examples of fraudulent chit fund. Post these scams surfaced, many small chit funds have stopped functioning. Meanwhile, state-run chit funds like Kerala State Financial Enterprises (KSFE) and Mysore Sales International Limited (MSIL) have gained popularity.