CNBC-TV18’s Siddharth Zarabi reports that the multi-level marketing companies will be banned by the government. The proposal has been mooted by the department of financial services and is likely to be fast tracked considering the seriousness of the chit fund scam
The government is moving to ban multi-level marketing (MLM companies through an amendment to The Prize Chits and Money Circulation Schemes (Banning) Act, 1978. The proposal has been mooted by the department of financial services and is likely to be fast tracked considering the seriousness of the chit fund scam, an issue that was discussed by the standing committee of finance on Friday. CNBC-TV18’s Siddharth Zarabi reports.
The chit fund mess has a lot of details coming out , but the first big scam of this kind was Speak Asia. When the government and every agency concerned tried to figure out whether Speak Asia was even regulated or entitled to operate in India, it discovered that the Singapore-based company was out of reach of almost every Indian agency and law.
Given what has happened with Saradha Group and others, the department of financial services and the department of economic affairs (DEA) which has concurred that this proposal finally moots a specific amendment which will ban MLM companies from operating in India.
When will this be operationalised, the legal amendment will have to go through the Parliamentary route and will be tabled for Cabinet approval which will come up shortly. However, in some ways this is the biggest regulatory loophole beyond what has been reported in the collective investment scheme — a mess that has been dogging India for so many years and is proposed to be closed.
With regards to chit fund mess, the parliament standing committee headed by Yashwant Sinha on Friday, grilled the entire finance ministry brass led by the finance secretary almost a day long hearing and the details that are coming out.
Details that have been shared including, central board of direct taxes (CBDT) findings that there is massive tax evasion in Calcutta based chit funds and this is not a recent discovery. Two years were assessed by the IT department in Calcutta, reports were sent to almost every agency concerned in India, nothing happened, yet the Saradha scam broke.
In the Saradha scam, the IT department has confessed to the standing committee that it has not been able to obtain the details as the West Bengal police and other authorities have refused access. All this paints a situation where the government is yet to come to grips with the chit fund issue but the key news will be that it may be doomsday for companies like Speak Asia very shortly.
READ MORE ON chit fund, Saradha, MLM, multi-level marketing , Prize Chits , Speak Asia, DEA, Yashwant Sinha, CBDT
ADS BY GOOGLE
video of the day
Modi premium not waning; mkt may have turned: Samir Arora