Press Information Bureau

Government of India

Ministry of Corporate Affairs

13-August-2012 17:58 IST

Frauds by Chit Funds and MLM Companies

The Government has enacted a Central Legislation “The Prize Chits and Money Circulation Schemes (Banning) Act, 1978” for the purpose of prohibiting any person from promoting or conducting any Prize Chits and Money Circulations Scheme as defined in the said Act. The implementation of the central Act has been vested with the respective State Governments. There is no proposal to set up a central institution to enforce the provisions of the Act. However, the Central Economic Intelligence Bureau (CEIB) has been suggested to coordinate with the concerned State agencies, undertake some sample studies of Multi-Level Marketing (MLM)/Money Circulation Schemes, and share the result of such studies with the concerned regulators.

This information was given by Minister of State for Corporate Affairs Shri R.P.N. Singh in reply to a written question in the Rajya Sabha today.

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ST

Ban on prize chit and money circulation schemes reinforced; central coordination for studies and regulator information sharing follows. The Prize Chits and Money Circulation Schemes (Banning) Act forbids promotion or conduct of prize chits and money circulation schemes, with enforcement responsibility vested in the respective state governments; no central enforcement agency is proposed. The Central Economic Intelligence Bureau is proposed to coordinate with state agencies, undertake sample studies of multi-level marketing and money circulation schemes, and share results with concerned regulators to support state-level implementation and oversight.