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April 27, 2013

New Law for chit fund has teeth and retrospective clause

New Law for chit fund has teeth and retrospective clause

The State Govt. is heading for a new Bill for new Chit Fund Law by convening First emergency assembly session in 50 years.

The Special session of WBLA is on April 29 and April 30 and will discuss the new Bill –  Interest of Depositors` in Financial Establishment Bill 2013 and have it passed.

There are certain new effective incorporations in the new bill which will make the Law much more stringent in order to curb the crime.

Old Bill

New Bill

In the earlier Bill brought by the Left Govt. the term `Competent Authority`  used to define District Magistrate and Commissioner of Police.



Under the previous bill, only establishments could be booked.

Administrative authorities could enter premises and inspect certain documents, search and make seizure. It said of “mere attachment”.

 Bill had no retrospective effect.

In the new Bill the term `Competent Authority` has been redefined.

In the new Bill the term will define the Directorate of Economic Offences



The new Bill gives power to the administrative authorities to enter premises and inspect certain documents, it gives power to search and make seizure, confiscate properties and its management.

There would be provision for “confiscation” of property instead of “mere attachment”.

The new bill will empower the government to book individuals also.

Certain other consequential and incidental provisions are also made.

The Bill will have retrospective effect.

Once it becomes an Act, the legislation will be able to effectively deal with the Saradha Group scam and other similar incidents.

The new bill will be more stringent and empower authorities to confiscate assets of the perpetrators.


 The Bill says that when a Commission of Inquiry has been constituted under Section 3 of the Inquiry Act of 1952, before the coming in to force of this Act and a report for recommending Commission of an offence by a financial establishment under this Act has been furnished to the State Government after coming in to force of this Act, the provision of Act or any Rule made thereunder or any order made under any such rule relating attachment confiscation of properties of such financial establishment and of every person including the promoter, partner, director, manager, member, employee or any other person responsible for the management of or conducting business or affair of such financial establishment shall have effect notwithstanding anything inconsistent therein contained in any other Law for the time being in force or any custom or any instrument  having effect by the virtue of any such Law.