Reserve Bank of India

Reserve Bank of India

Reserve Bank of Indian has allowed non-resident Indians (NRIs) to
invest in chit fund to encourage flow of capital into the country.

Decision in this regard was taken after RBI had revised the extant
guidelines for subscription to the chit funds in consultation with the
government.

Henceforth, NRIs on non-repatriation basis will be allowed to invest
in chit fund without any ceiling. However, the subscription to the
chit funds by NRIs will be mandatorily brought in through normal
banking channel, including through an account maintained with a bank
in India.

The state government may permit any chit fund to accept subscription
from NRIs on non-repatriation basis. It will be permitted by the
registrar of chits or an officer authorized by the state government in
accordance with the provisions of the Chit Fund Act, 1982.

Earlier in May 2000, RBI had barred NRIs from investing in a company
or firms engaged in the business of chit fund.

Apart from this decision, RBI also extended the scheme allowing
airline companies to raise external commercial borrowings (ECB) for
working capital as a permissible end-use under the approval route.
Now, the ECB scheme will continue till March 31, 2016.

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