The Reserve Bank of India (RBI) has permitted NRIs to subscribe to the chit funds without limit on a non-repatriation basis.
However the subscription to chit funds should come through the normal banking channel, including through an account maintained with a bank in India, said the RBI.
RBI also said that the Registrar of Chits or an officer authorised by the State Government in accordance with the provisions of the Chit Fund Act in consultation with the State Government concerned should permit any chit fund to accept subscription from NRIs on non-repatriation basis.
Until now NRIs were not allowed to make investment in India in any form, in a company or partnership firm or proprietary concern or any entity, whether incorporated or not, which is engaged or proposes to engage in the business of chit fund.
The revision in the guidelines were made in consultation with the government.
What is Chit fund?
A chit fund is a scheme under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money in instalments periodically over definite time and that each subscriber is entitled to prize amount, which is determined by lot or by auction specified in chit agreement.