Section 47 of the Chit Funds Act, 1982: RBI Power to Inspect Chit Books and Records

Section 47 of the Chit Funds Act, 1982 preserves the inspection powers of the Reserve Bank of India in relation to the books and records of a chit foreman. It also deals with the RBI's inspection report, directions to the foreman and transmission of the report to the appropriate State Government.

In brief: Section 47 operates alongside Section 46. An inspection by the Registrar under Section 46 does not take away the RBI's inspection power under Section 45N of the Reserve Bank of India Act, 1934.

Statutory text of Section 47

47. Power of Reserve Bank to inspect chit books and records.

(1) Nothing in section 46 shall be deemed to affect the power of the Reserve Bank to inspect the books and records of any foreman under the provisions of section 45N of the Reserve Bank of India Act, 1934 (2 of 1934).

(2) The Reserve Bank may, if it considers necessary, forward a copy of its report or of any part of its report on the inspection of the books and records of a foreman to the foreman for taking necessary action.

(3) Every foreman shall, on receipt of the report or part thereof under sub-section (2), be bound to comply with the directions, if any, given by the Reserve Bank in this behalf and shall, if so required, submit periodical reports in regard to the action taken by him.

(4) The Reserve Bank may also forward a copy of the report on the inspection of the books and records of a foreman to the State Government within whose jurisdiction the registered office of the company, if the foreman is a company, or the place or the principal place of business of the foreman in any other case, is situated for such action as may be considered necessary.

Meaning and scope of Section 47

The provision makes clear that the statutory inspection mechanism under the Chit Funds Act does not displace the Reserve Bank's separate inspection authority. Section 47(1) expressly refers to Section 46 of the Chit Funds Act and Section 45N of the Reserve Bank of India Act, 1934.

Section 47(1): RBI inspection power is preserved

Sub-section (1) is a saving provision. It provides that the Registrar's inspection power under Section 46 does not affect the RBI's power to inspect the books and records of a foreman under Section 45N of the Reserve Bank of India Act, 1934.

Section 47(2): Inspection report may be sent to the foreman

If the RBI considers it necessary, it may forward the whole or any part of its inspection report to the foreman so that necessary action can be taken. The provision therefore connects inspection with corrective or compliance action.

Section 47(3): Compliance with RBI directions

Where the report or part of it is forwarded under sub-section (2), the foreman is bound to comply with any directions given by the RBI in that behalf. The RBI may also require periodical reports describing the action taken by the foreman.

Section 47(4): Report may be forwarded to the State Government

The RBI may send its inspection report to the State Government having jurisdiction over the foreman's registered office, place of business or principal place of business, as applicable. The State Government may then take such action as it considers necessary under the applicable legal framework.

Key terms used in Section 47

The expression "foreman" is a defined term under Section 2 of the Chit Funds Act, 1982 and refers, in substance, to the person responsible for conducting the chit. For the precise statutory definition and related definitions, the consolidated Act should be consulted.

"Reserve Bank" refers to the Reserve Bank of India. Section 47 specifically links its inspection role to Section 45N of the Reserve Bank of India Act, 1934.

Practical effect of Section 47

  • The Registrar's inspection under Section 46 and the RBI's statutory inspection power are not mutually exclusive.
  • The RBI can communicate inspection findings to the foreman for necessary action.
  • A foreman must comply with directions given by the RBI under Section 47(3).
  • The RBI may require periodic compliance or action-taken reports.
  • The RBI may share its inspection report with the State Government having territorial jurisdiction.

Related provisions

Section 47 should be read particularly with Section 46 - Inspection of chit books and records by Registrar. The next provision, Section 48, begins Chapter X dealing with circumstances in which chits may be wound up.

Official legal resources

Page reviewed and updated: 16 September 2026.