Sucheta Dalal :Reserve Bank of India asks lenders to keep watch on MLM firms
Sucheta Dalal

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Reserve Bank of India asks lenders to keep watch on MLM firms  

August 19, 2009


Reserve Bank of India has asked all the banks to keep an eye on the suspicious accounts of multi-level marketing firms. The central bank has also asked the banks to undertake quick reviews of certain accounts, opened in the names of marketing agencies, retail traders and investment firms, where large number of cheque books has been issued to these firms.
Moneylife had reported about the ponzi schemes in its last issue, which highlighted a need for some investigation in order to protect depositors from these frauds. Moneylife highlighted the strange deposit scheme that is proliferating in the states of Orissa, Chhattisgarh, Karnataka and Maharashtra which already collected almost Rs10 billion and was expanding virtually unchecked.
RBI has also asked banks to undertake a special ongoing monitoring in the accounts of MLM firms where large volumes of small cash deposits are being made in those accounts and withdrawals are being made there from, through cheques written for small amounts, either across the counters or through clearing.
The RBI circular also mentioned names of some of the suspected MLM firms like Fine India Sales Pvt Ltd, Lakshya Levels Marketing, Eve Industries, Trident Advertising and Trade Links Pvt Ltd, Super Life Link Distributors, Lue Brain Education Society and Manya Mantra Marketing.

-- Sucheta Dalal