Section 23 of the Chit Funds Act, 1982 - Books and Records to be Kept by Foreman

Section 23 of the Chit Funds Act, 1982 specifies the books, registers, ledgers and other records that a foreman must maintain in connection with chit business. These records provide a documentary account of subscribers, assignments, draws, payments and deposits relating to the chits conducted by the foreman.

Act: Chit Funds Act, 1982 (Act 40 of 1982)

Chapter: Chapter III - Rights and Duties of Foreman

Section: 23

Subject: Books, records, etc., to be kept by foreman

What does Section 23 require?

Section 23 imposes a record-keeping obligation on the foreman of a chit. The required records are ordinarily to be maintained at the registered office, place or principal place of business of the foreman. Where chit business is conducted through a branch office, sub-office or other place of business in another State, the provision also addresses maintenance of records relating to the business conducted in that State.

The provision is important because the records maintained by the foreman create an organised account of the subscribers participating in a chit, proceedings of draws, amounts paid, payments to prized subscribers, assignments of tickets and deposits made with approved banks.

Section 23 - Statutory Text

23. Books, records, etc., to be kept by foreman. - The foreman shall maintain in his registered office, or, as the case may be, in the place or the principal place of his business, or, where the foreman has any branch office, sub-office or any place of business for the conduct of chit business in a State other than the State in which his registered office or the principal place of his business is situated, in such branch office, sub-office or place of business in respect of the business conducted in that State -

(a) a register containing -

(i) the names and full particulars of the subscribers in each chit together with the number of tickets held by each subscriber;

(ii) the dates on which the subscribers signed the chit agreement; and

(iii) in the case of an assignment of a ticket by a subscriber, the name and full address of the assignee with the date of assignment and the date on which the assignment had been recognised by the foreman;

(b) a book containing the minutes of the proceedings of each draw;

(c) a ledger containing -

(i) the amounts paid by the prized subscribers in each chit and the dates of such payments;

(ii) the amounts paid to the prized subscribers and the dates of such payments; and

(iii) in the case of any deposit in an approved bank mentioned in the chit agreement, the date and the amount of such deposit;

(d) a register in the prescribed form showing the amounts deposited in approved banks as required under the provisions of this Act in respect of all chits conducted by the foreman at his office; and

(e) such other registers and books in such form as may be prescribed by the State Government within whose jurisdiction the chit is conducted.

Records to be Maintained by the Foreman

In practical terms, Section 23 requires the foreman to maintain several categories of records. The principal statutory requirements can be summarised as follows:

Provision	Record	Information to be Maintained
Section 23(a)	Subscriber register	Subscriber particulars, number of tickets, dates of signing the chit agreement and particulars of recognised assignments.
Section 23(b)	Minutes book	Minutes of the proceedings of each draw.
Section 23(c)	Ledger	Payments by prized subscribers, amounts paid to prized subscribers and relevant approved-bank deposit details.
Section 23(d)	Deposit register	Amounts deposited in approved banks as required under the Act.
Section 23(e)	Other prescribed records	Additional registers and books in the form prescribed by the relevant State Government.

Subscriber Register under Section 23(a)

The first major requirement is a register containing details of the subscribers in every chit. The register must record the names and full particulars of subscribers together with the number of tickets held by each subscriber.

It must also record the dates on which subscribers signed the chit agreement. Where a subscriber assigns a ticket, particulars of the assignee, the date of assignment and the date on which the foreman recognised the assignment must also be recorded.

Minutes of Each Draw under Section 23(b)

The foreman must maintain a book containing the minutes of the proceedings of every draw. This requirement should be read with the other provisions of the Chit Funds Act governing the conduct and recording of chit draws.

Maintaining the minutes provides a continuing documentary record of the proceedings connected with each draw and assists in establishing what occurred during the operation of the chit.

Ledger under Section 23(c)

Section 23(c) separately requires a ledger. It must contain the amounts paid by prized subscribers in each chit and the dates of those payments. It must also show amounts paid to prized subscribers and the respective payment dates.

Where the chit agreement provides for a deposit in an approved bank, the ledger must record both the date and amount of that deposit.

Register of Deposits under Section 23(d)

A foreman must also maintain a register, in the prescribed form, showing amounts deposited in approved banks as required under the Chit Funds Act in respect of the chits conducted at the office.

Other Records Prescribed by the State Government

Section 23(e) recognises that additional record-keeping requirements may be prescribed at the State level. A foreman should therefore comply not only with the records expressly listed in Section 23 but also with applicable rules and prescribed forms in the State within whose jurisdiction the chit is conducted.

Important: Chit fund administration involves both the Central Act and applicable rules, forms and regulatory requirements. The relevant State rules and directions of the competent Registrar should therefore be checked for operational compliance.

Why are the Records under Section 23 Important?

The records specified in Section 23 document the principal financial and administrative events occurring during the conduct of a chit. They identify subscribers and ticket holdings, record assignments, preserve the proceedings of draws and provide details of relevant payments and bank deposits.

These records also operate alongside other record-related provisions of the Chit Funds Act. For example, the Act contains provisions concerning inspection and preservation of chit records. Proper maintenance of the records under Section 23 therefore forms part of the wider statutory framework governing accountability in the conduct of chit business.

Related Provisions

Legal reference: Section 23, Chit Funds Act, 1982 (Act 40 of 1982). Readers should verify applicable State rules, notifications and amendments for current compliance requirements.