BANKING SCAMS IN INDIA

What are Bank Frauds?

The banking system of any country consists of the small savings of its people. When a large number of
people deposit a small amount of their savings into the banks, it turns into a huge amount. This huge
amount used by Commercial Banks to lend money to individuals and earn profits from the interest on
theses loans. Sometimes it happens so, that the individual who borrowed money from the bank does
not pay it back. These become Non Performing Assets (NPA) to the banks which further create
significant threat to the very existence of banks. Here's a chart about the bank scams that took place in
India during the year 2018.

1. Bank Scam by Vijay Mallya

Main Accuse: Vijay Mallya

Fraud Amount: ₹9,432 crore

Mallya had borrowed Rs. 9,432 crore for his Kingfisher Airlines from 13 banks till February 2018. The
biggest lender was State Bank of India with 1600 crore, followed by PNB with 800 crore, IDBI with 650
crore and Bank of Baroda with 550 crore. He ran away from India on 2nd March 2016 and is in hiding in
London. The Government ofIndia is fighting for his extradition even today.

2. Nirav Modi Scam

Main Accuse: Nirav Modi and his uncle Mehul Surakshi

Fraud Amount: ₹11,400 crore

This scam, of Rs. 11,400 crore, is being called the biggest scam in the banking sector ofIndia. Billionaire
jeweller Nirav Modi and his uncle Mehul Surakshi are the mainaccused of this scam. A "Letter of
Undertaking" had been given to both of them from theconsent of the employees of PNB’s Mumbai
branch and withdrawn the funds from the foreign banks on the guarantee of Punjab National Bank. The
Enforcement Directorate,however, has seized Nirav Modi's assets worth over Rs 5870 croreKolkata-
based Allahabad Bank has claimed of having an exposure of ₹2,363 crore in thePNB fraud case. The
scam in the Allahabad bank involved the misuse of SWIFT technique by the internal employees of the
Allahabad bank.

3. Rotomac Scam
Main Accuse: Vikram Kothari (Owner)

Fraud Amount: ₹3,695 crore

Vikram Kothari, the promoter of Rotomac pen, allegedly cheated seven banks with Rs.3,695 crore.
Vikram Kothari has misappropriated loans from seven banks worth Rs.2919 crore. His total outstanding
amount including interest is Rs. 3695 crore. RotomacGlobal is now being probed by Enforcement
Directorate (ED) and Central Bureau ofinvestigation (CBI) . The CBI has arrested Vikram Kothari, the
managing director ofRotomac Global Pvt Ltd.Here's a chart displaying information about all the banks
and the amount of their moneythat is stuck in this scam.

4. R P Info Systems Scam

Main Accuse: Company Directors - Shivaji Panja, Kaustuv Ray and Vinay Bafna

Fraud Amount: ₹515.15 crore

A computer manufacturer R P Info Systems and its directors were booked by the CBI forallegedly
fraudulently cheated a consortium of nine banks including PNB, SBI andCanara Bank with Rs. 515.15
crore. The banks accused R P Info System of taking a loanon the basis of fabricated and fraudulent
documents.

5. Kanishka Gold Pvt. Scam

Main Accuse: Bhupendra Kumar Jain (Director) and his wife Neeta Jain

Fraud Amount: ₹824.15 crore

This scam is related to the biggest Private Sector Bank of the country, SBI, leading theconsortium of 14
public and private sector. The principle loan is about Rs. 824 crore,along with the interest due, a loss of
more than Rs 1,000 crore will be faced by thebanks.

The main accuse is Chennai-based company Kanishka Gold Pvt. The company did notpay a loan of Rs.
824 crore, which has been converted into "NPA". A case as beenregistered against Kanishka Gold by CBI
and ED has started investigating the fraud.

6. PMC Bank scam

Punjab Maharashtra Co-operative Bank is a Scheduled Commercial bank situated in 6 states of the
country. This bank was established on February 13, 1984 as a single branch Bank. In a span of 35 years,
the Bank has a wide network of 137 branches across six states. This bank has total deposits of about Rs
11,617.34 crore.

The crux of this bank fraud is that the higher management of the PMC bank has given huge loan to the
Housing Development and Infrastructure Ltd (HDIL) and its group entities. This fraud case is related to
transfer of 70% of the total credit facilities of the PMC bank to HDIL and its associated companies. If i
talk about the total amount of the bank fraud then it was Rs 4,355 cr. Now the total NPA of the bank has
grown to 73%. The PMC bank allegedly favoured to the promoters of Housing Development and
Infrastructure Ltd (HDIL) and allowed them to operate password protected ‘masked accounts’. It is
found that around 21,049 bank accounts were opened by bogus names to conceal 44 loan accounts. The
bank's software was also tampered to conceal these loan accounts.This bank fraud case is busted by a
bunch of women employees of the credit department of the PMC bank. These employees told to the RBI
that they were aware of the ghost accounts. When this case came in the light; then customers of the
PMC bank rushed to the PMC bank to withdraw their hard earned money but they were refused to give
their deposited money and withdrawal limit is set by the bank.