Govt asks states to ban multi-level marketing schemes
to curb such schemes.
“In fact, we are working on bringing in these companies under the Companies Act. This is possible under section 583 of the act where such unregistered companies will be considered deemed registered, thereby bringing them under the MCA’s purview,” a government official told the Indian Express.
The MCA has circulated The State Money Circulation Scheme (Banning), 2012, among states, where it has also suggested that the nodal police authority in the state would be responsible for interacting with other states for information on such companies while the central government and concerned departments will furnish information regarding these companies to the Reserve Bank of India.
However, other investigating agencies will also have the authority to get information from states governments and other agencies.
The MLMs do not fall under the direct jurisdiction of any regulator or department and hence is not effectively monitored. The ministries of finance and home and regulators including the RBI and Sebi have already conveyed that they don’t look into the matters concerning MLMs.
Earlier, in India, MLMs such as Pinnacle Education and Opportunity Ltd, Gurudev Travel Connection, City Limousine and Kanakdhara Gold have been probed for alleged frauds.
Ponzi schemes
* After the case of alleged fraud by SpeakAsia Online, the government started the process of reining in companies which offered impossibly high returns in a short span
* An inter-ministerial committee suggested setting up of a central agency to oversee MLM schemes and proposed to filter and block websites above a certain number of
