Chit Fund Association urges not to link them with Ponzi scam

All India Association of Chit Funds has urged media to refrain from labelling ponzi scams by non-banking financial companies as "chit fund scam" as the funds do not accept deposits from public.
"It is a well known fact that the Chit Fund companies are not allowed to accept deposits from the public, trade in stocks, equity or other cash management. Chit fund company means a company managing, conducting or supervising as foreman, agent or in any other capacity, chits as defined in section 2(b) of 'The Chit Funds Act, 1982," the Association said in a statement.
The Association said apart from the regulatory hurdles, "the most dangerous threats" this industry was facing was the "negative perception" that has been created in minds of people by reporting all financial scams as 'chit fund scam'.

"The fact is not a single chit fund has failed since the enactment of the Chit Fund Act, 1982 and ever prior to that, except for a few stray instances, this system has been functioning seamlessly," it said.
The statement said the association has raised objection with all concerned and that includes regulators, administrators, concerned departments and ministries and to the media but somehow the message could not be effectively conveyed and thereby a chaotic condition prevails.
The association has requested the Government, to "carry out public awareness campaign, distinguishing chit funds from the ponzi schemes, for the benefit of the general public lest they again fall in the trap of another 'Saradha'. More so, when this time it may not be possible to blame it on 'Chit Funds'", it said.