The Andhra Pradesh Federation of Chit Funds has demanded that the government impose a ban on chit funds indulging in unauthorised operations.

The federation urged the government to incorporate stringent provisions in the Chit Fund Act, 1982 to check violations besides creating awareness among the people about the importance of activities of registered chit funds. Efforts should be made to ensure that banks are allowed to finance chit fund companies with marginal rate of interest in times of necessity while levying of “unnecessary” taxes such as service tax should be done away with, Federation president B. Suryaprakash Rao and secretary general Ch. Janardhan Reddy said.

In a statement, they said that in the wake of the recent scandal involving Saradha Group in West Bengal, people had started viewing chit fund operations with suspicion and tended to jump to conclusions about these companies not being trustworthy.

The presence of more than 3,000 chit fund companies in the State speaks volumes about their strengths and contribution to the economy, they said.