Section 11 of the Chit Funds Act, 1982: Use of Chit Fund, Chitty, Kuri, Fraternity Fund and ROSCA Names
Section 11 regulates who may use specified expressions associated with chit business. Following the Chit Funds (Amendment) Act, 2019, the provision includes the expressions "fraternity fund" and "Rotating Savings and Credit Institution" in addition to "chit", "chit fund", "chitty" and "kuri".
What Section 11 requires
The rule works in both directions. A person carrying on chit business must use at least one of the specified expressions as part of the person's name. At the same time, a person who is not carrying on chit business cannot use any of those expressions as part of the person's name.
Text of Section 11
Section 11 - Use of words "chit", "chit fund", "chitty", "kuri", "fraternity fund", or "Rotating Savings and Credit Institution".
(1) No person shall carry on chit business unless he uses as part of his name any of the words "chit", "chit fund", "chitty", "kuri", "fraternity fund" or "Rotating Savings and Credit Institution" and no person other than a person carrying on chit business shall use as part of his name any such word.
(2) Where at the commencement of this Act,-
(a) any person is carrying on chit business without using as part of his name any of the words specified in sub-section (1); or
(b) any person not carrying on chit business is using any such word as part of his name, he shall, within a period of one year from such commencement, add as part of his name any such word or, as the case may be, delete such word from his name:
Provided that the State Government may, if it considers necessary in the public interest or for avoiding any hardship, extend the said period of one year by such further period or periods not exceeding one year in the aggregate.
Meaning of important terms
Chit
Section 2(b) broadly defines a "chit" as an arrangement under which a specified number of persons agree to make periodical subscriptions for a definite period and each subscriber, in turn and in the manner provided by the chit agreement, becomes entitled to the applicable net chit amount. The 2019 amendment also added "fraternity fund" and "Rotating Savings and Credit Institution" to the terminology used in the statutory definition.
Chit business
Under Section 2(e), "chit business" means the business of conducting a chit. Section 11 therefore links the use of the protected expressions directly to whether the person is actually carrying on chit business under the Act.
Effect of the 2019 amendment
The Chit Funds (Amendment) Act, 2019 substituted Section 11 with effect from 1 January 2020. Among other changes, it expressly recognised "fraternity fund" and "Rotating Savings and Credit Institution" as names that may be used for regulated chit activity. The change was intended to help distinguish legitimate chit funds from illegal prize-chit or money-circulation schemes.
Section 11 compliance at a glance
- A person carrying on chit business must include a permitted chit-related expression in the person's name.
- A person who does not carry on chit business must not use the protected expressions as part of the person's name.
- The protected expressions include "chit", "chit fund", "chitty", "kuri", "fraternity fund" and "Rotating Savings and Credit Institution".
- The current wording of Section 11 reflects the Chit Funds (Amendment) Act, 2019, effective from 1 January 2020.
Official legal resources
For the authoritative statutory text and current legislative material, see the Chit Funds Act, 1982 on India Code and the Department of Financial Services, Ministry of Finance.
Note: This article is intended for general legal information. For a specific chit-fund registration, naming, compliance or enforcement issue, the applicable Central Act, State rules, notifications and competent Registrar's requirements should be checked.