Chit funds can't take public deposits, says RBI

The Reserve Bank of India (RBI) today prohibited chit funds from accepting deposits, a move that could make banks the sole public deposit-taking institutions in the country.
The apex bank said these funds could accept deposits only from their shareholders. Chit funds are dually regulated by state government and the RBI. They are registered with the registrar of chit funds under state governments and are regulated by RBI if they accept public deposits.
RBI regulates them through the Miscellaneous Non-Banking Companies (Reserve Bank) Directions Act. Now, the Act has been amended to ban them from accepting public deposits.