India's Biggest Financial Scams

Created on 07 Jul 2022

Wraps up in 6 Min

Read by 28.2k people

Updated on 14 Oct 2023

India's alliterative success story Skilled Labour force, Softwares, aaand 🥁 SCAMS.

From time to time, we have seen many financial scams on a large scale. Scams that caused losses of thousands of crores rupees. These scams keep happening repeatedly, and it's already too late when we hear about them.

People at higher positions in financial institutions or public banks are aware of these scams and still let them happen because of greed. For the money, they help fraudsters in doing big scams.

Be it the case of Nirav Modi, Vijay Mallya, Harshad Mehta, or the 2g scam, every time some people get sold for a certain amount of money, and help these scammers by making their jobs easier.

There have been many scams, more than you can ever imagine.

A Glimpse into the Current Scenario of Scams In India

Everyone is greedy in some way or the other, but the greed of a person should have a limit. We can choose to take control of it and use it in a good way or let it take over our minds completely.

In FY21 83,638 bank fraud cases were reported in India. That means we saw 229 frauds per day. The total amount of money involved was ₹1.38 Lakh Crore, and so far, less than 1% of it has been recovered. i.e. ₹1,0131.31 Crore. The RBI revealed this information in response to an RTI filed by India Today.

These scamsters are looting the country, and strict actions must be taken against them. But the major problem is that the seeds of these big scams are sowed in the offices of higher-level executives of public financial institutions only. So until or unless something is not done against these executives and they don’t feel that what they are doing is wrong and needs to stop, this situation is tough to change.

According to the RBI, there was a year-on-year reduction. But the number is still very high, and many scams also get unnoticed, so the situation is still worse.

5 Biggest Financial Scams in India🤯

Scam #1: ABG Shipyard Scam🚢

ABG Shipyard Scam

Source: Economic Times

Did you know this scam was even more significant than Nirav Modi’s PNB Scam?😵‍  ₹22,842 Crores were defrauded over 5 years. ABG Shipyard took loans from a consortium of banks (28 banks), which was led by ICICI Bank, IDBI Bank, and later SBI Bank in 2001.

According to the CBI, ABG Shipyard took loans from 2005, but when they failed to repay them, their account was declared a non-performing asset or NPA in 2013.

Later on, a forensic audit was carried out by Ernst and Young in 2019, and it was revealed that ABG Shipyard violated the agreements as the funds were being transferred to other related companies and allegedly used for investments through overseas subsidiaries.

According to Nirmala Sitharaman, this scam was detected faster than the average time to detect these frauds. SBI (one of the impacted banks) filed the case to CBI and also said that there had been no delay in reporting the case.

Scam #2: Commonwealth Games Scam🎯

Commonwealth Games Scam

Source: The Bridge

This scam included criminal conspiracy, corruption, and forgery for cheating, all in one event. When India hosted the Commonwealth Games for the first time in October 2010, the organisers took big advantage of their power and exploited as much of the country's money as they could. In total, there was pilferage of around ₹70,000 crores! Can you imagine?😱 It is estimated that only half of the money that was allotted to spend on the Indian sportspersons was used.

Suresh Kalmadi

Suresh Kalmadi (Source: Economic Times)

According to the reports of the Central Vigilance Commission, the chairman of the organising committee of the games, Suresh Kalmadi offered a contract of ₹141 crores to Swiss timings for its timing equipment. Shockingly, this amount was unnecessarily high by ₹95 crores.

Some other discrepancies were misappropriation of funds, payments to non-existent parties, and willful delays in executing contracts. The accused were investigated by CBI and were charged and jailed in 2011.

Scam #3: Satyam Scam


Satyam Scam

Ramalinga Raju (Source: Trade Brains)

Another popular stock market scam in India that led to the tightening of various regulations was The Satyam Scam. This time, the real estate market was the foundation of this scam. Mr Ramalinga Raju was the owner of Hyderabad-based one of the fastest growing IT companies - Satyam Computers. During that time, real estate was booming in India. Further, based on the inside information about the Hyderabad Metro Rail project, he started buying land around the proposed metro route.

However, he was running short of funds to buy more land. Therefore, he decided to manipulate his company's stocks by resorting to window dressing. He started issuing fake invoices and manipulating bank statements to show higher sales and cash reserves. This directly increased the share prices of his company. He then sold his holdings in his own company such that it reduced to only 2% in 2009 from 24% in 1999.

However, the 2008 recession changed his fate. The real estate prices fell dramatically. Land owned by Mr Raju was no longer profitable. Further, the gap between fake revenue and real revenue increased to such an extent that he had no other option but to reveal his fraud. He revealed everything to SEBI and was later sentenced to imprisonment for fraud of nearly Rs. 7800 crore.

Ramalinga was sentenced to 7 years of imprisonment. It raised multiple questions on the laws, accounting practices, auditing and corporate governance in India and brought to the forefront, the loopholes that existed in various stages. Various changes were made in the laws, and special emphasis was put on corporate governance. 

Many committees were formed for recommendations and implementation of reforms and policies. Further, the Companies Act, 1956 was repealed by the new Companies Act, 2013 and amendments were carried out in the Listing Agreement. 

Scam #4: Bribe for Loan Scam💸

Bribe for Loan Scam

Source: Pexels

This scam was carried out by a private financial services company and some of the top executives at public sector banks. The CMD and other associates of the private financial services company, Money Matters, allegedly bribed many top executives of public banks in return for sanctioning large-scale corporate loans.

Money Matters acted as middlemen between officials of the public banks and private firms who falsely availed crores of rupees as loans.

They made deals for loans worth ₹8,000 crore. CEOs, general managers, and deputy general managers of financial institutions like LIC Housing Finance, Bank of India, Punjab National Bank, etc were arrested by the CBI.

These loans became non-performing assets and forced banks to restructure corporate debt.

Scam #5: Hawala Scam💰

Hawala Scam

Source: Milli Gazette

In the 1990s, a raid on a terrorist camp happened in Kashmir. It revealed the secrets of this scam. The story of this scam revolves around two Jain brothers, often referred to as the Hawala brothers. During the interrogation, the terrorist told the police that their organisation was funded through Hawala, using the Jain brothers and their families as conduits.

Based on the interrogation, CBI raided Surendra Kumar Jain, his brothers, relatives, and businesses. The scam also brought politicians like L K Advani, Arjun Singh, Yeshwant Sinha, and Madan Lal Khurana the limelight who were allegedly transferring black money to the terrorists through the Jain brothers.

Around $18 million in bribery was involved. The Supreme court gave a judgment of 26 points, the most important one making the government and politicians incapable of removing or influencing the CBI director for 2 years so that the CBI can operate independently.

Final Thoughts

The amount of money these scammers have stolen to date is insane. We may not understand the downside of it in the short term but when you try to see the big picture, you will realise how our country has lost lakhs of crores because of these greedy people. This money could have been used for the development of our nation.

We must keep our nation first. Strict laws should be made against these scammers so that these scams can’t be repeated. There are chances that more scams are taking place as you are reading this article, but we are not aware of them yet.

That’s why the government should pay massive attention to preventing such scams so that we don’t have to suffer more losses.

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Akshatraj Gupta

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Akshat is a generalist who loves to learn, travel, meditate, and build things.

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