Margadarsi MD Sailaja Kiron Calls For Digital Reforms, Lower GST To Strengthen India's Chit Fund Sector

 

 

Bengaluru : Chit funds, one of India's oldest financial systems, continue to be a vital source of economic support for millions who cannot easily access banks, said Sailaja Kiron, Managing Director of Margadarsi Chit Fund Pvt. Ltd. Speaking at the All India Chit Fund Summit 2025 held in Bengaluru on Saturday, she highlighted the need to preserve and modernise this traditional savings network. Addressing the summit, Sailaja suggested three major amendments needed in the Chit Funds Act, 1982.

 

First, she stressed the importance of allowing secure digital draws without mandatory physical presence, noting that the current law requires at least two subscribers to be physically present during a draw. "This requirement is impractical in today’s digital era. Verified online participation would ease operations and cut unnecessary burdens," she said. Second, she pointed to delays caused by rules on unclaimed prize money.

 

Presently, the security deposit of a chit can be released only after all subscribers' claims are settled. If a single subscriber fails to claim their prize, it can hold up the entire process. She recommended allowing companies to place unclaimed funds in a dedicated account and submit proof to the registrar for the timely release of the security deposit. Third, she sought an extension of the balance sheet filing deadline from three to six months, in line with company law. "This simple change will reduce compliance stress," she noted. Appeal for Lower GST and Stricter Oversight Currently, chit funds are taxed at 18% GST (Goods and Services Tax).

 

Sailaja urged the government to reduce GST to 5% or exempt the sector entirely, arguing that chit funds play a critical role in financial inclusion across India. She also called for stricter action against unregistered operators, warning that they undermine public trust and put subscribers' savings at risk. "We are not asking for concessions," she added. "We only seek a level playing field so registered chit funds can operate fairly and responsibly." Manoj Kumar (IFS), Managing Director of Mysore Sales International Limited, praised Sailaja for highlighting key issues.

 

Using an anecdote from a dance performance at the event, where one dancer supported another who nearly dropped a lamp, he compared chit funds to a system that helps members support each other in times of need. IAS officer S.B. Shettennavar agreed that chit funds are especially helpful for ordinary people and called for greater public awareness and reforms to bring unregistered companies under regulation. He assured that the suggestions for changes to the Chit Funds Act would be conveyed to the central government.