7 Biggest Financial Scams in India

India has faced some of the biggest financial scams in the last two decades, leaving a trail of deceit and financial loss. With India being a fast-growing economy, there has been a huge influx of money flowing in and out of the system. While this has surely paved the way for economic growth, it has also allowed some individuals to use the loopholes in the financial system to their advantage. 

These scams often involve cleverly devised projects that turn out to be fraudulent, causing immense harm to investors. The stock market, a crucial aspect of India’s financial landscape, has been a breeding ground for manipulation, affecting the trust of many. Various cases have unfolded, revealing Ponzi schemes, where promised returns to lure in unsuspecting individuals, only for their investments to vanish. These financial missteps underline the importance of scrutinizing projects, understanding the stock market, and being cautious in financial dealings to protect against such cases.

From the Harshad Mehta case to the infamous 2G spectrum scam, here’s a list of the 7 biggest financial scams in India:

1. ‘Coalgate’: INR 1.86 Lakh Crore (Approx.)

The ‘Coalgate’ scam was among the biggest scams in India, partly because of the government’s supposed role in the scandal. As per a report by the Comptroller and Auditor General (CAG) of India, the then UPA government was involved in the inefficient and possibly illegal allocation of coal blocks from 2004 to 2009. During the revision of the guidelines between 1993-2003, a total of 70 coal blocks were allocated by the government. CAG argued that even though the government had the power to auction these coal mines, it didn’t do so, helping allocatees make “windfall gains”. 

As per CAG’s report, the loss to the exchequer was estimated at a whopping 10.78 lakh crores, before settling at 1.86 lakh crore. It was said that the coal blocks had been improperly allocated by avoiding the standard ‘competitive bidding’ process and favoring certain organizations/individuals. 

Labeled the ‘mother of all scams’, it was a huge blow to the particular government’s reputation and involved some top leaders & bureaucrats. Bureaucrats H.C. Gupta (former Secretary), K.S. Kropha (former joint secretary) & K.C. Samaria (ex-director, Coal Ministry) were eventually found guilty & jailed.

2. 2G Spectrum Scam: INR 1.76 Lakh Crore (Approx.) 

Once famously referred to as the “second biggest instance of abusing executive power“, the 2G spectrum case made headlines globally. The CAG published yet another report in November 2010 that shook the country. 

These reports revealed that 2G licenses for mobile networks were being issued to operators at astonishingly cheap prices, causing a loss of ₹ 1.76 lakh crores to the exchequer. Rather than a fair & transparent auction process, the licenses were issued to incompetent applicants, who submitted fake documentation and used illegal methods to obtain licenses. 

They then sold them to different companies, by charging a premium on the original pricing. The premium was estimated to be the true value of the licenses, profits from which would go to the public exchequer. Some of the prime accused in the case were A. Raja (then telecom minister), Unitech chief Sanjay Chandra and Vinod Goenka – founder of DB Realty. The case is still active, with CBI appealing to the court against the acquittal of those accused, as of 2018.

3. CWG Scam: INR 70,000 Crore (Approx.) 

The 2010 Commonwealth Games in Delhi made headlines for many reasons, one of them being the ₹70,000 crore scam that happened during the global event. One of the biggest instances of corruption in recent Indian history, it was marred by scams at every stage – from the tender allocation to the athlete’s accommodation.

It was estimated that only half the amount was spent on athletes, with the rest being spent wastefully. Rather than working with contractors who could provide quality equipment & services, money was spent to sign over-quoted deals with shady firms. Investigations by the CAG suggested that the event’s “Organizing Committee” participated in the scam, with Chairman Suresh Kalmadi being the prime accused.

4. Nirav Modi – PNB Bank Fraud: INR 14,000 Crore (Approx.) 

Born and brought up in Antwerp – the ‘diamond capital of the world‘, Nirav Modi is a third-generation diamantaire who ranked 57th on the ‘Forbes Billionaire List’ in 2017. A rather famous businessman with multiple political connections, he’s accused of committing fraud worth ₹14,000 crores with his uncle – Mehul Choksi.

In 2018, a PNB officer filed a complaint against 3 people for submitting fraudulent papers and taking advantage of the neglect of responsibilities. After receiving his first fraudulent guarantee in March 2011, Nirav managed to receive 1,212 more such guarantees over the next 6.5 years. Once the ED took over, many other details came forward, prompting Nirav to flee to the UK, after the government labeled him a ‘fugitive economic offender‘ in December 2019.

5. Vijay Mallaya: INR 9,000 Crore (Approx.) 

The ‘King of Good Times’, Vijay Mallya was chairman at UB Group – the parent company of Kingfisher Airlines. Flamboyant & flashy, Mallya enjoyed immense popularity before a loan fraud case put a full stop to his entrepreneurial career.

Using his contacts in the UPA government, he took loans worth ₹9000 crores from 17 different banks. By 2012, Kingfisher Airlines ran out of cash, shutting down operations in 2012. Mallya refused to pay back the loan & fled to the UK in 2016. While much of the amount has been recovered by selling off his personal assets, the Indian government is still trying to extradite Mallya from the UK.

6. Satyam Scam: INR 14,162 Crore (Approx.) 

Ramalinga Raju, founder of Satyam Computers, and his brother Rama Raju were the perpetrators of this scam. Among the biggest scams in recent history, Raju and his aides started overstating the amount in the balance sheet for transactions. During a probe by CBI, Ramalinga Raju confessed to forging the company’s revenues, so as to inflate share prices. The loss to shareholders was estimated at around ₹14,000 crores before Satyam was sold to Tech Mahindra in an auction.

7. Harshad Mehta’s Stock Market Scam: INR 5,000 Crore (Approx.) 

If you’ve seen the 2020 series ‘Scam 1992: The Harshad Mehta Story’, chances are you’re already aware of this case. Committed by Harshad Mehta, a Gujarati stockbroker; it was the biggest money market scam in India at that point, amounting to nearly ₹5,000 crores in 1992. Taking advantage of loopholes in the banking system, Mehta took loans from various banks and put them in the stock market. He would then raise the price of shares of companies using RFDs (ready-forward deals). 

A systematic stock fraud, caused the Indian stock market to crash, affecting thousands of investors.

Final Thoughts

So this was all on the list of the top 7 financial scams in India. While there have been many instances of fraud over the years, none have matched the magnitude of those on this list. Not only did they leave a huge impact on India’s economy, but also forced the government to come up with stringent laws for the future.

FAQS On Biggest Financial Scams in India

What is the biggest financial scandal in the world?

The Enron scandal (2001) is one of the biggest financial scandals globally, involving corporate fraud, accounting manipulation, and substantial financial losses for investors and employees.

What are the latest scams 2023?

As of my last update in January 2022, I don’t have specific information on scams in 2023. Stay informed through news sources for the latest on cyber threats and financial scams.