Navigate to Members >> Member Categories select Import Categories:

In the new page import your file:

1. You can use this setting to delete all of the existing categories on your site.

2. Upload your file here.

You can find the Category Import template attached to this article. 

IMPORTANT NOTE: By default all members can be listed in 1 Top Level / Main Category and multiple Sub Categories.. However there is a workaround : Workaround: Members Selecting Multiple Top Level Categories