Press Information Bureau

Government of India

Ministry of Corporate Affairs

13-August-2012 17:59 IST

Regulation of Multi-Level Marketing Companies

Government is aware of a number of multi-level marketing companies operating in the country are disguised as those selling products but they are inherently operating money circulation scheme. Some complaints have been received, in the light of which, the Government, in Department of Financial Services, has constituted an Inter- Ministerial Group consisting of representatives from Department of Financial Services, Ministry of Corporate Affairs, Reserve Bank of India, Securities Exchange Board of India, Department of Consumers Affairs, CIEB (Department of Revenue) and SFIO to –

(i) Draft Model Rules on the Multi Level Marketing Companies and on the prohibited scheme under the prize Chits and Money Circulation Schemes (Banning) Act, 1978.

(ii) Frame clarificatory guidelines on how to distinguish between genuine direct sales from disguised money circulation scheme.

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

Multi level marketing regulation seeks model rules and guidelines to distinguish genuine direct sales from disguised money circulation schemes. An Inter Ministerial Group including financial, corporate, securities, consumer and investigation agencies has been constituted to draft model rules for Multi Level Marketing Companies and to specify prohibited schemes under the Prize Chits and Money Circulation Schemes (Banning) Act; the Group will also frame guidelines to distinguish genuine direct sales from disguised money circulation schemes to support enforcement and consumer protection.