A total of 87 companies have come under the government scanner for allegedly running illegal multi-level marketing (MLM) investment schemes and seven of them are being probed for possibly serious frauds.
The government has ordered inspection of accounts of remaining 80 companies for any violation of company regulations, Corporate Affairs Minister Scahin Pilot informed Lok Sabha in a written reply.
Most of these companies are located in West Bengal and Tamil Nadu and one company registered outside the country doing business online in association with some Indian companies, he said.
Pilot further said that Ministry has ordered Serious Fraud Investigation Office (SFIO) to probe into the affairs of seven companies.
Besides, SFIO has also been ordered scrutiny of balance- sheets of the remaining 80 companies to ascertain whether the firms have violated the provisions of the Companies Act.
Raising of funds through money circulation scheme is an offence under the Prize Chits and Money Circulation Schemes (Banning) Act 1978.
The Act is administered by the Department of Financial Services through the state governments.
Recently, Finance Ministry in consultant with RBI have circulated model rules to be notified by the states.
In order to protect the interest of small investors, various awareness programmes are being conducted regularly by the ministry in coordination with the trade and industry association and professional institute such as Institute of Chartered Accountants of India (ICAI), Institute of Cost Accountants of India.