Drive to Identify and Weed Out Companies Resorting to Multi-Level Marketing Schemes

According to the information available with the Ministry of Corporate Affairs, companies resorting to Multi-Level Marketing Schemes are doing so in contravention of either the Prize Chits and Money Circulation Schemes (Banning) Act, 1978 or by floating unauthorized ‘Collective Investment Schemes’ in contravention of Section 11AA of the Security and Exchange Board of India (SEBI) Act, 1992. Giving this information in written reply to a question in the Rajya Sabha, Shri Sachin Pilot, Minister for Corporate Affairs, said that none of these companies also appear to be registered as Non-Banking Finance Companies (NBFC). As part of its drive to identify and weed out such companies, Ministry of Corporate Affairs has shared the particulars of around 34,000 companies with objectives of carrying on financial business with the Reserve Bank of India (RBI). RBI has taken up verification of such companies.