Top 10 Financial Scams in India

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Top 10 Financial Scams in India

Financial Scams in India have hit economies across the globe. These scams can easily taint the reputation of any country. It basically refers to the criminal activity done by an individual by taking away money or other assets from others. There are so many cases of Financial Scams in India.

These kinds of Financial Scams in India are performed by the individuals who invest in the stock market and are involved in any other kind of Investments. These people think out of the box and indulge in criminal activities like scams.

NorthStar Academy is a prominent education provider that deals with educating Finance and Accounting skills to the aspirants who want to take up the challenges in life. A deep study in finance will help to understand these scams and make you take up the good decisions for investment in a legal way.

Have you ever read about top 10 frauds in india ?

Do you have any idea about the Financial Scams in India?

Let’s sneak peek to some of the Biggest Financial Scams in India 

1. THE SATYAM COMPUTERS SCAM

This is considered as one of the biggest financial scams in India held in 2006-2008. This scam broke on January 7, 2009, when founder-chairman of Satyam Computers Ramalinga Raju confessed and disclosed Rs.7000 Crore accounting fraud in the balance sheets.

He manipulated the books by overall Rs. 12,318 Crore misstatements. The company’s internal audit reports detected 7, 561 fake bills. Ramalinga along with the other 10 members was convicted in April 2015. After the scam came to light, the auction for the sale of the company was ordered by the government.

2. KETAN PAREKH AND THE STOCK MARKET SCAM OF 2001

 Ketan Parekh was a Chartered Accountant by profession and was looking out for stocks with low market capitalization and low liquidity, and would then pump money in these shares and within his own network of the company, start fictitious trading. What did Ketan Parekh do?

He purchased the stakes from not-so-known market capitalization companies and lifted up the prices through circular trading with other traders.

He applied a pump and dump scheme. He managed funds from promoters, institutional investors, and banks to take up the prices of shares. He took loans and lay orders. When the market crashed Ketan Parekh was meeting with losses along with the banks from where he took loans. Bank of India filed a case against Ketan Parekh for issuing pay orders of 137 crores. He was arrested and tried in court for performing insider trading, share price manipulation, duping institutional investors.

3. HARSHAD MEHTA AND THE STOCK MARKET SCAM

This was also involved in one of the biggest financial scams in the history of India. Harshad Mehta started his broker business after starting the career of broker in BSE. He used the Ready forward deal, which was a kind of short-term instrument for banks. Brokers act as the mediator in ready-forward deals.

Harshad Mehta discovered the loopholes in the RF deal to create money and he used these loopholes. He used RF deal as a chain system which helped him accumulate a lot of money.

He created fake recipes for banks and manipulated the stocks to take them to a higher level. When the market started collapsing, he started facing losses and was unable to return the money to the banks. On 23 April, 1992, the scam of Harshad Mehta was disclosed in The Times of India. CBI arrested Harshad Mehta.

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4. NIRAV MODI, THE PUNJAB NATIONAL BANK SCAM

Nirav Modi – A luxury diamond Jewellery and designer along with some of his relatives and employees of Punjab National Bank were the key accused of this scam.

The bank issued fraudulent LOUs (Letter of Undertaking) worth Rs. 10,000 crore. Using fake LOUs, bankers imported pearls for one year and ignored the guidelines of RBI. The employees of PNB misused the SWIFT facility to transfer messages to Allahabad Bank and Axis bank on fund requirements.

5. SARADHA SCAM

This scam was held in 2003 and 2011. This impacted both upper class as well as middle-class investors. The Chairman of Saradha Company issued bonds and debentures to raise funds for the company. Sudipta Sen did not issue approval from SEBI and asked the agents to bring investors who will invest in these securities for which the agents will earn a commission.

And from this, he raises Rs.4,000 crore. SEBI discovered some mishappening in Saradha Company and notified the West Bengal government. Sarah developed a network of companies within it to confuse SEBI. After that Ponzi scheme collapsed and people were accused including several politicians. Sudipta Sen was arrested.

6. 2G SPECTRUM SCAM

This scam was the mother of all scams. This scam forced the former telecom minister to resign and then the telecom ministry allotted wireless radio spectrums and licenses to private operators. These were allotted at very low prices which lead to huge losses.

7. COMMONWEALTH GAME SCAM

Commonwealth games- the most publicized game, were the target of investors involved in scams. This scam was done by the former chairman of the commonwealth games – Suresh Kalmadi. This scam depicted Rs. 35,000 crore.

8. TELGI SCAM

Abdul Karim Telgi- A con artist with his mastered art of forgery printed duplicate stamp papers. Various Government Departments supported this scam and made the country feel shamed with lots of corrupt practices.

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9. IPL SCAM

Indian Premier League, the most-awaited and celebrated event for Indians, indulged in unlawful practices and sometimes illegal. Politicians and others were said to be laundering black money with false identities of investor.

10. VIJAY MALLYA 

In the past, he was known as “king of good times” but he destroyed his reputation by allegedly owing Rs. 9000 crore as loan for Kingfisher Airlines from banks. The Fugitive Economic Offenders Act has recently dubbed him a fugitive economic offender. 

These were the Financial Scams in India which put the country’s image and reputation into question. These illegal practices are a sign of shame to the country’s extent.

United Breweries Holdings Limited (UBHL) or UB Group is an Indian company based in Bangalore that owns the Kingfisher brand.  The UB group consists of several businesses, but its core activities are beer, aviation, and investment.

UB UB Group markets its beer product under the name Kingfisher. UB Group owns several brands of beer. Kingfisher was launched in 1978 and is now one of the largest beer producers in India.

Kingfisher beer is sold in many other countries as well. The UB group also operates Kingfisher airlines in India. As of December 2011, Kingfisher Airlines had the second largest share of domestic air travel in India. As a result of its inspections, the company closed its operations in India. 

FAQs

1. Which is the biggest financial scam in India?

Harshad Mehta scam is considered as one the biggest financial scams in the history of India.

2. What are the newest financial scams in India?

2G SPECTRUM and commonwealth games scam are the recent financial scams in India.

3. What are the top 10 financial scams?

The top ten financial scams are –
●     The Satyam computer scam
●     Harshad Mehta Scam
●     Punjab National bank scam
●     Nirav Modi scam
●     Ketan Parekh scam
●     Vijay Mallya scam
●     Saradha scam
●     2G spectrum scam
●     IPL SCAM
●     Hawala scam

4. Who is the richest scammer in the world?

A Nigerian advance-fee fraud artist known as the Owelle of Abunuga, Emmanuel Nwude Odinigwe is a former director of the Union Bank of Nigeria is the richest scammer in the world.

5. How many financial scams are there in India?

Overall, India witnessed 83,638 cases of banking frauds involving Rs 1.38 lakh crore, but only Rs 1,031.31 crore has been recovered

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