The inter-ministerial committee also suggested framing of fresh guidelines on the nature of operation of the direct selling and MLM companies
New Delhi: A government panel has suggested running a public campaign under the flagship consumer awareness programme 'Jago Grahak Jago' to guard the gullible investors against multi-level marketing (MLM) and pyramid structure companies collecting money through ponzi schemes, reports PTI.
The recommendation has been made by the inter-ministerial committee, headed by Consumer Affairs Secretary and comprising of members from Reserve Bank of India (RBI), Finance Ministry, Corporate Affairs Ministry and Law Ministry among others, sources said.
The panel has suggested that this consumer awareness programme can be used to make the public aware about pitfalls of ponzi schemes, which typically involves collection of money from public in different layers with promise of rising returns with every new investors added to the scheme.
The committee has also suggested framing of fresh guidelines on the nature of operation of the direct selling and MLM companies so that genuine companies are differentiated from those taking the investors and general public for a ride.
Department of Financial Services is currently examining formulation and issuance of guidelines for such firms under the Prize Chit and Money Circulation Schemes (Banning) Act, 1978, which will be circulated among the concerned ministries for their views once it is completed, sources said.
The department will also consult market regulator SEBI while framing the guidelines, they added.
The committee was constituted in July this year by the Consumer Affairs ministry, after it received complaints regarding alleged large scale frauds by multi level marketing companies, which included defaults in payments and operators disappearing with the money collected from public.
The committee was mandated to examine the complex issues related to the working of such firms, fill the regulatory gaps and suggest measures to safeguard the interests of the consumers.