Panel lens on pyramid schemes

New Delhi, Nov. 18 (PTI): To check the menace of companies collecting money from the public through pyramid schemes, a government panel has suggested wide-ranging changes in the rules governing such businesses, including a ban on defaulter firms and blocking their websites operated from abroad.

The inter-ministerial committee has suggested the setting up of a central agency to oversee multi-level marketing (MLM) schemes and framing of fresh guidelines for them by the finance ministry in consultation with market regulator Sebi and other ministries and agencies.

In pyramid schemes, popularly known as Ponzi schemes, money is pooled in by the operators from public for dubious investment purposes with a promise of hefty returns.

The committee, comprising members from the RBI and the ministries of consumer affairs, corporate affairs, finance and law, has suggested that action can be taken against online firms such as Speak Asia even if consumers do not complain against them.

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