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Which are the Top 5 financial scams in India?

Top 5 Financial Scams In India

India has witnessed many high-profile frauds in the last decade. “Financial Scam’s” has now become a household talk after the hit web series based on the 1992 Scam by Harshad Mehta. However, some frauds affected the country more than any other. Here are some of the scams that shook the Indian financial system. In this article, we will be covering the top 5 financial scams in India.

Top 5 Financial Scams In India

1. Vijay Mallya/ Kingfisher Scam:

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Sometimes even the “King of good times” can also have bad days. Known as one of the most glamorous business tycoons India ever had. Vijay Mallya, the brain behind once the second-largest liquor and beer selling brand in the world. The Kingfisher scam is well known as it is one of the more recent accounts of fraud to have hit the Indian market. Mallya with his aim to expand his business empire launched Kingfisher Airlines, in an already competitive industry. The USP of his airline was simple, luxury and comfort. The aim of customer satisfaction as the top priority worked as Kingfisher Airlines became the second-largest domestic flight in India. To expand it to a global level, Mallya bought the Air Deccan, an airline known for its low-cost flights and wanted to maintain the same luxury and comfort he provided.

However, the luxury and comfort came at a cost. To manage the luxury and comfort provided in both the airlines(Kingfisher Airlines and Kingfisher Red(Air Decan)), Mallya had to increase the prices of his tickets which led to the customers looking for other cost-effective airlines. This event started to increase the Debt Mallya had. Mallya lost the trust he built in the industry due to an increase in Debt with Airport and Oild&Gas companies over unpaid vast dues. Followed by the failure in payment of Salaries of employees, the final resort was to apply for a loan. Mallya took loans from 17 PSU Banks.

Unable to pay the loan and interests back, the debt amount rose to Rs.9000 Crores. Mallya escaped India and settled down in Brittan. Mallya has still been trying to convince the Banks and Government to pay out the Principal amount, yet the attempt has been still in vain.

2. Commonwealth Games scam:

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The next scam that stands out in the list of top 5 financial scams in India is Common Wealth Games Scam. There are scams that change the reputation of an individual and then there are scams that damage the reputation of a whole nation. Host of the 2010 Commonwealth Games, India witnessed the Commonwealth Games Scam, known as the CWG scam. The game was foreshadowed by different charges of corruption and fraud.

CWG was one of the biggest scams seen by India, amounting to around Rs.70,000 Crores. India planned to invest around 12Billion Rupees for the development of facilities; however, it was discovered that only half of the money was used for development. The Central Bureau of Investigation(CBI) started an investigation over accusations of scams and misappropriation of funds in the games.

Over investigation, CBI found scams like Lightening Scam, Swiss Timing scam, etc. Many Bureaucrats, politicians and businessmen were found to be involved in the scam and charges were put against them by the ED and CBI. The Scam tinted the image of India on an international stage and was greatly covered by the International Media

3. 2G Spectrum Scam

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One of the most controversial scams in India, the 2G Spectrum scam by former Telecom Minister A Raja along with 14 other accused was listed in the Times Magazines Top Ten Abuses of power ever.

A Raja and his associates were accused of illegally selling the frequency allocation licenses to different telecom companies for less prices than the standard listed. The shortfall between the same was valued around INR1.7Lakh. The Scam brought light to the inefficiency and corruption in the Law Ministry, TRAI, Finance Ministry, etc.

There were charges that firms like Unitech, Swan Telecom got licenses without any prior experience in the industry. With hearing in court, all 122 licenses sold during the period of A raja were canceled and firms were ordered to pay a certain amount of monetary fine.

In this list we have only included top 5 Financial Scams in India but the list of scams is very long.

4. Nirav Modi/PNB Scam:

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No one would have figured out that India’s diamond mogul Nirav Modi would be at the epicentre of one of the largest banking scams in India. Nirav Modi, the founder of Firestar Diamond, the only Indian ever to be listed on Sotheby’s and Christie’s auction catalogues shocked the Indian banking sector when he and CMD of Gitanjali Gems Mehul Choksi were accused of fraud and scamming the Punjab National Bank of Rs.11,300 crore.

Nirav Modi and Mehul Choksi were accused of using acquiring fraudulent letters of undertaking from one of the branches of PNG and using them for overseas credit from other Indian lenders. PNB discovered the fraud while checking some unauthorized transactions for the benefit of some account holders in one of its Mumbai branch. Once CBI and ED started investigating the case, it came into account how big the fraud had become.

Once accused, Nirav Modi defaulted to the United Kingdom. The moguls family and accused in the scam have been arrested and the extradition procedures to get Nirav Modi back in India for proceedings are still being heard in the UK Courts. The scam still stands as one of the largest scams in India.

5. Coal Allocation Scam:

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The coal allocation scam, popularly known as ‘Coalgate’ was a scam surrounded by the UPA govt. in 2012. The Colgate is known to be the event the shook the UPA government out of power and showed the governance in the government. The Scam was under serious scrutiny by the Controller Auditor General(CAG).

During its governance in 2012, the UPA was accused that the government allocated 194 coal blocks wrongly to private enterprises for their captive use but the right procedure was to that the interested private enterprises have to bid in the auction. However, the report by the CAG showed improper allocation done by the authorities of coal blocks parting away from the official procedures. It was estimated that the Coal Allocation Scam accounted to a loss of Rs.10.6Lakh Crores to the government with tabled parliament figures estimating it to be 1.86Lakh crores.  

These scams have taken a huge toll on the nation’s economy and affected the country massively.

Read Also: What are the best cryptocurrency trading platforms?

Conclusion

These were the some of the most famous and top 5 financial scams in India that shook the Indian financial system. Hope You have liked our article on Top 5 Financial Scams in India. If you enjoyed reading our article then do share it with you friends.

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Ritik Banger

Founder and Editor of Answer Pup. An Engineering Graduand who loves to write in History, Politics, Tech, Opinion, and Facts.

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