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Financial Scams In India

IamCheated.com Research Team | August 29, 2018  8:09:am

India has experienced many frauds in the last few decades and it has become a way of earning money. Fraudsters come up with different ideas to lure people and make money. Indian banks have lost crores of rupees to frauds in the last few years. Our country occupies the 76th position vis-à-vis corrupt countries, out of 168 countries. In this blog, we will discuss various financial scams that took place in India.

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Financial Scams In India

1. Harshad Mehta Case

The Harshad Mehta scam is one of the most talked of scams and took place in the year 1992. Harshad Mehta is an Indian stockbroker who cheated many investors by taking advantage of loopholes in the banking system. Harshad and his associates drained funds from inter-bank transactions.  They bought huge amounts of shares at a premium across industry verticals which led to the Sensex rising dramatically. In just 3 months the share price of Associated Cement Company (ACC) rose from Rs 200 to Rs 9,000 due to manipulations.

After the scam got exposed, banks wanted their money back and this caused the Sensex to plunge as dramatically as it had risen. Harshad was arrested and banned from trading in stock markets.

2. Satyam Scam

Satyam Scam is a big corporate scandal in India. This scam came to light in the year 2009, when founder-chairman of Satyam Computers, Ramalinga Raju, confessed to manipulating accounts to show increased sales, profits and margins from 2003 to 2008. The INR 7,000 Crore accounting fraud was disclosed in the balance sheets.

The investigation was taken over by CBI and three charge sheets were filed over the period of one year. Later all three charge sheets were merged into a single charge sheet.  On April 9th, 2015, a court found Ramalinga Raju along with nine others guilty and they were sentenced to seven years of imprisonment.

3. Nirav Modi Scam

The Nirav Modi Scam is India's biggest bank fraud. This fraud took place between 2011 and 2017 and was detected in the third week of January 2018. Nirav Modi, the 48 year old diamantaire, defrauded Punjab National Bank to the tune of Rs 11, 000 crores.  Using fraudulent Letters of Undertaking (LoU), his company Firestar Diamond took loans and failed to repay them. While Nirav Modi has left India and is presumed to be in the UK, PNB employees who helped Nirav Modi carry out the fraud are now behind bars.

See Also: Everything you need to know about nirav modi scam

4. Rotomac Scam

The Rotomac scam is the second biggest in the year 2018. The promoter of Rotomac Global Private Limited, Vikram Kothari and his son, defaulted on loans to the tune of Rs 3,695 Crores vis-a-vis a consortium of seven nationalized banks.

5. Ketan Parekh Scam

Ketan Parekh was a stockbroker who was involved in stock market manipulations that occurred from late 1998 to 2001. Ketan Parekh bought shares in fictitious names using large sums of money borrowed from banks to manipulate the share prices of companies. As a result, he was barred from trading in the Indian stock exchanges.

6. Saradha Scam

Saradha Scam is a major scam that took place in West Bengal. The group which ran a chit fund, cheated many investors by making them invest in their investment schemes with a promise of providing high returns. They had collected around Rs 200 to Rs 300 billion from over 1.7 million depositors.