The Kolkata police was granted four-day transit remand by a Kashmir court to take chit fund scam accused Sudipto Sen and two others to West Bengal, even as sources in the Ministry of Corporate Affairs informed that chit funds in India are governed by the Chit Funds Act, 1982.

Sen, chairman of Saradha group which is accused of defrauding thousands of depositors, along with director Debjani Mukherjee and another company official Arvind Singh Chauhan, were presented before Chief Judicial Magistrate of Ganderbal, Parvez Hussain Kachroo, who granted the transit remand.

Earlier, Sen, Mukherjee and Chauhan were put through medical examination before being presented in the court. Doctors declared them fit to be taken out of the Valley by the Kolkata police team.

Meanwhile, sources in the Ministry of Corporate Affairs have informed that chit funds in India are governed by the Chit Funds Act, 1982.

Under the Act, the chit fund businesses can be registered and regulated only by the respective state governments.

The regulator of chit funds is the Registrar of Chits appointed by the respective State government under Section 61 of Chit Funds Act.

The powers of adjudication vest in the Registrar and the concerned state government is the Appellate authority.

In case of failure of a chit fund business, the responsibility for winding up such a business also vests with the respective state governments.

Additionally, prize chits and money circulation schemes are illegal and are banned under the Prize Chits and Money Circulation Schemes (Banning) Act, 1978.

Powers of investigation under this Act are vested with the concerned state police authorities while the power to make rules under this Act, is also vested with the respective state government.