Chit Funds Act, 1982 | Chapter XIII - Miscellaneous | Section 73

Section 73 of the Chit Funds Act, 1982 - Advisory Role of Reserve Bank

Section 73 of the Chit Funds Act, 1982 gives the Reserve Bank of India an advisory role on questions of policy arising under the Act. The provision enables the Reserve Bank to advise a State Government either on its own initiative or when the State Government asks for such advice.

Text of Section 73 - Advisory role of Reserve Bank

Section 73. The Reserve Bank may tender to any State Government such advice on questions of policy with respect to this Act as it thinks fit either on its own motion or on a request made by the State Government.

Meaning and scope of Section 73

The expression "Reserve Bank" refers to the Reserve Bank of India. Section 73 concerns advice on questions of policy relating to the Chit Funds Act, 1982. It does not state that the Reserve Bank is the day-to-day registering or supervisory authority for chit business under the Act.

The provision operates in two ways. First, the Reserve Bank may offer policy advice to a State Government on its own motion. Second, a State Government may request the Reserve Bank to advise it on a policy question concerning the Act. The statutory language is enabling: it provides for an advisory relationship between the Reserve Bank and State Governments.

Who regulates chit funds?

The Chit Funds Act, 1982 is a Central Act administered through the State Governments. The Reserve Bank of India explains that registered chit funds may legally conduct chit business under the Act and that chit fund business itself is regulated under the Chit Funds Act and implemented by State Governments. Section 73 should therefore be read as a policy-advisory provision rather than as a transfer of general chit-fund administration to the Reserve Bank.

Why Section 73 is important

Chit funds involve financial transactions, but their statutory administration has a significant State-level component. Section 73 creates an express channel through which the Reserve Bank can contribute its financial-sector expertise to State policy under the Act. This helps distinguish the Reserve Bank's advisory role under Section 73 from the functions assigned elsewhere in the Act to the State Government, Registrar and other statutory authorities.

Position after the Chit Funds (Amendment) Act, 2019

The Chit Funds (Amendment) Act, 2019 amended several provisions and expressions in the principal Act. The current official consolidated text continues to set out Section 73 as the provision dealing with the advisory role of the Reserve Bank. The wording reproduced above is consistent with the official consolidated text available from the Government of India.

Official legal resources

Practical note: Requirements concerning registration, administration, filings and other operational matters should be checked under the Chit Funds Act, 1982 together with the rules and notifications applicable in the relevant State or Union Territory.

This page is intended for general legal information. For a specific transaction, dispute or compliance issue, consult the current statutory text, applicable State rules and notifications, and professional advice where necessary.