Consider the following statements regarding financial entities in India:
1. Chit Fund Companies are regulated by the respective State Governments under the Chit Funds Act, 1982.
2. Nidhi Companies are governed by the Ministry of Corporate Affairs (MCA) and function under the Companies Act, 2013.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Question

Consider the following statements regarding financial entities in India:
1. Chit Fund Companies are regulated by the respective State Governments under the Chit Funds Act, 1982.
2. Nidhi Companies are governed by the Ministry of Corporate Affairs (MCA) and function under the Companies Act, 2013.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

ONLiNE UPSC · Accepted Answer

Statement 1 is correct: Chit Funds are regulated by the Chit Funds Act, 1982, and the administration of this Act lies with the State Governments, including registration and supervision.

Statement 2 is correct: Nidhi Companies are non-banking financial entities that primarily operate to encourage savings among their members. They are governed by the Companies Act, 2013, and the regulations are issued by the Ministry of Corporate Affairs (MCA). RBI does not regulate them directly, although it can issue directions to them on matters relating to their deposit acceptance activities.

Financial Entities in India

Regulation of Chit Fund and Nidhi Companies

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M Question 1	⏱ 0
Consider the following statements regarding financial entities in India: 1. Chit Fund Companies are regulated by the respective State Governments under the Chit Funds Act, 1982. 2. Nidhi Companies are governed by the Ministry of Corporate Affairs (MCA) and function under the Companies Act, 2013. Which of the statements given above is/are correct? (a) 1 only (b) 2 only (c) Both 1 and 2 (d) Neither 1 nor 2