law: Chit Funds Act, 1982
  8.Minimum
  
  capital requirements for the commencement, etc., of a chit, and chit, and
  
  creation of a reserve fund by a company.-
  (1)Notwithstanding
  
  anything contained in the Companies Act, 1956, but subject to the provisions of
  
  this Act, a company shall not commence or carry on chit business unless it has
  
  a paid-up capital of not less than rupees one lakh.
  (2)Every
  
  company having a paid-up capital of less than rupees one lakh and carrying on
  
  chit business on chit business on the commencement of this Act, shall, before
  
  the expiry of a period of three years from such commencement, increase its
  
  paid-up capital to not less than rupees one lakh.
  Provided that the State Government may, if it considers it necessary in the
  
  public interest or for avoiding any hardship, extend the said period of three
  
  years in respect of any company by such further period at periods not exceeding
  
  two years in the aggregate:
  
  Provided further that no such company shall commence any new chit the
  
  duration of which would extend beyond the said period of three years or such
  
  extended period or periods under the first proviso unless it increases its
  
  paid-up capital to not less than rupees one lakh.
  (3)Every
  
  company carrying on chit business shall create and maintain a reserve fund and
  
  shall, out of the balance of profit of each year as disclosed in its profit and
  
  loss account and before any dividend on its shares is declared, transfer to
  
  such reserve fund, a sum equal to not less than ten per cent, of such profit.
  (4)No
  
  company shall appropriate any sum or sums from the reserve fund except with the
  
  prior approval of the Registrar and for the purpose of obtaining such approval,
  
  it shall an application in the prescribed form to the Registrar explaining the
  
  circumstances relating to such appropriation.