Chain marketing schemes are still having a nice time, despite SEBI’s enhanced powers
The Direct Selling Association of India and the high-profile,
multinational multi-level marketing (MLM) companies have stepped up the
pressure on the National Democratic Alliance (NDA) government to frame
new rules to give them legal cover. After the arrest and long
incarceration of the chairman & CEO of Amway India (since 27th May),
and the virtual crackdown on QNet, promoted by a Malaysian national, the industry is in serious disarray.
The MLM industry’s argument is: frame tough rules but remove the ambiguity about the legitimacy and legality of MLM companies
operating in India. They also insist that they do not fall under the
purview of the Prize Chits & Money Circulation Act, 1954. However,
Moneylife has held the view that all MLMs lure people with the promise
of high returns and their very structure requires them to entice people
to become agents or distributors.
While powerful foreign companies in the MLM business are lobbying the
government, the Securities & Exchange Board of India (SEBI) is
struggling to initiate action against hundreds of ponzis and ‘collective
investment schemes’ that are destroying lives and savings. Consider
just one example. KBC Multi Trade, a Nashik-based company, seems to be a
repeat of West Bengal’s Saradha scam. It is reported to have collected Rs2,000 crore from unsuspecting victims and the promoters are now absconding. Two of its agents
have committed suicide under pressure. The scheme promised to triple
the investment in 30 months on an investment of Rs1 lakh each.
Unfortunately, the greed for high returns is so pervasive that these
schemes manage to garner a few thousand crore rupees each. It is
important for the government to keep this in mind before it allows
itself to be influenced by those who are lobbying for legal protection
for MLMs and chain schemes.
No comments:
Post a Comment