New Delhi : To check the menace of companies collecting money from the public through ponzi 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 being operated from abroad.

The inter-ministerial committee, set up to look into the matter, has also suggested 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.          Such schemes are also broadly known as ‘ponzi’ schemes, wherein money is pooled in by the operators from public for dubious investment purposes with a promise of hefty returns.      The committee, comprising of members from Reserve Bank as also Consumer Affairs, Corporate Affairs, Finance and Law ministries, also suggested that action can be taken against online companies like Speak Asia even if consumers do not complain against these entities, sources said.

The panel has favoured nominating a central agency by the Department of Financial Services with powers to probe such firms and to take legal action against the defaulters.     However, the panel does not favour a central legislation to regulate MLM companies as the matter relates to the state governments and state police, which have sufficient powers to take action against such firms under existing regulations.

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