With reference to Chit funds consider the following statements Any savings scheme run by a NBFC can ...........

Economic and Social Issues Rural Banking and financial institutions

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With reference to Chit funds, consider the following statements.

Any savings scheme run by a NBFC can be termed as chit funds.
Some chit funds are run by state governments.
A chit fund is regulated by Central as well as state laws.

Select the correct answer using the codes below.

1 and 2 only

2 and 3 only

1 and 3 only

3 only

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Explanation:

Statement 1: Many NBFCs run contractual savings schemes. Nidhi Companies (as notified by the Central government) offer saving schemes and make credits available to those whose credit needs remain unmet by his commercial banks. Chit Fund Company is a company which collects subscriptions from specified number of subscribers periodically and in turn distributes the same as prizes amongst them. The chit fund companies enter into an agreement with the subscribers that every one of them shall subscribe a certain amount in installments over a definite period and that every one of such subscriber shall in his turn, as determined by lot or by auction or by tender, be entitled to a prize amount.

Statement 2: For e.g. the Kerala State Financial Enterprise (KSFE) and Mysore Sales international limited (MSIL) are PSUs that run chit fund business in a clean and transparent manner. To understand chit funds clearly, go through this comprehensive article