Mehul Choksi, a fugitive diamond merchant who was wanted in relation to the loan fraud case against Punjab National Bank (PNB), was taken into custody by Belgian police on 14 April. Vijay Aggarwal, Choksi’s attorney, informed reporters that the 65-year-old was taken into custody on April 12 and is presently imprisoned. He stated that they would resist India’s request for extradition and submit an application against his arrest. Citing reasons for Choksi’s appeal, Aggarwal assured reporters that his client is not a flight risk. He is receiving cancer therapy and is very ill. The CBI and Enforcement Directorate (ED) are seeking Choksi and his nephew Nirav Modi, who is awaiting extradition from London, for allegedly cheating the bank out of over INR 13,500 crore in 2018.
How Scam was Executed
Choksi, Modi, and the managing director of his company, Gitanjali Gems, were among the entities against which the PNB lodged a criminal complaint. They allegedly bribed executives at the bank’s Brady House office in Mumbai by using foreign letters of credit (FLCs) and letters of undertaking (LoUs). Weeks before the PNB scam came to light, Choksi and Modi left India in January 2018. Mehul Choksi’s presence in the European nation was confirmed by the Belgian foreign ministry to an Indian media outlet last month. They stated in a communication that they were cognisant of his presence and gave it careful consideration. However, the ministry stated that it does not comment on specific situations. Nevertheless, the FPS Foreign Affairs is still keeping a careful eye on the progress of this significant case.
Choksi on the Run
After getting a “residency card” in Belgium, Mehul Choksi and his wife, Preeti Choksi, have been residing in Antwerp. He was an Antiguan and Barbudan national who allegedly fled the island nation to receive cancer treatment with plans to relocate to Switzerland. He was discovered in Dominica, another Caribbean island nation, after going missing in Antigua in 2021. Union Finance Minister Nirmala Sitharaman informed lawmakers in December 2024 that properties valued at INR 2,565.90 crore had been either sold or restored to cover the debts of wanted people like Choksi.
Why Extradition will not be a Cake Walk?
The extradition procedure won’t be quick or simple, according to Choksi’s legal team, despite India’s increasing efforts to bring him back. “There’s no push,” Aggarwal noted. It’s a procedure. He has been the subject of non-bailable warrants since 2018. The presence of an open-ended, non-bailable warrant is a need for extradition. They had already attempted, but failed, to pick him up from Dominica. His client was receiving therapy in Antigua as a result of the Dominican court order. He had to travel to Belgium for medical treatment, and he has been receiving cancer therapy there. He clarified that a number of legal procedures must be completed before a country can extradite someone, including an arrest, bail processes, and discussions regarding the individual’s health, community links, and potential flight risk.
In the past few years, cases of many banking frauds have been gripping attention. Take the cases of these billionaire entrepreneurs like Vijay Mallya, Nirav Modi, and Lalit Modi, to name a few.
When most of the investors thought that the economy would be retained and business will run like usual, the Indian economy seems to have been hit again by another corporate bandit. We are talking about what is known to be the biggest scam in Indian History – the DHFL scam after the ABG Shipyard fraud case of Rs 20,000 crore.
Headquartered in Mumbai in the year 1984, the multinational housing corporation DHFL was founded with the idea to allow economical housing loans to lower and middle-income families in semi-urban and rural areas of India.
The DHFL stands for Dewan Housing Financial Limited, a well-known non-banking financial service provider in India and also the biggest in the sector it operates.
The Reveal of the DHFL Scam
All the tension started to begin for DHFL when the Central Bureau of Investigation (CBI) charged them and others for duping a sum of Rs 34,615 crores. There are about 17 banks that have been tricked by home loan provider DHFL. Former CMD Kapil Wadhawan and director Dheeraj Wadhawan are among 13 others who have been booked in connection with the case.
Kapil Wadhawan
Let us go through the following points to know the story behind the biggest case probed by the CBI.
The not-so-famous media house, ‘Cobrapost’ were the first one to reveal such shocking evidence against the DHFL company. They published an article citing the fraudulent activities carried out by the renowned housing finance company.
They revealed that DHFL has been using the loan money for its benefit by buying personal assets like properties and lands. However, to gain confidence in the eyes of the public, DHFL filed a response with the Bombay Stock Exchange stating there is no proper weightage to the allegations raised by the journalist group and that it was an act of causing damage to the reputation of the company.
To make the most out of these ‘false claims’ DHFL hosted conferences by inviting several investors/analysts to clarify that the Rs 31,000 crore loan is taken for an upcoming project.
The matters got off-hand when recently the CBI booked former promoters of the DHFL group for defrauding 17 banks in an amount of Rs 34,615 crore.
DHFL has borrowed a total of Rs 42,000 crore loans from banks like State Bank of India, and Bank of Baroda and the highest being borrowed from Union Bank of India (UBI), out of which DHFL has not paid a sum of Rs 36,000 crore. The UBI (Union Bank of India) has asked one of the leading providers of risk, financial, and corporate governance, KPMG to look into this matter.
They have been accused of syphoning off the money to their other companies or Shell companies to buy assets at a cost of public sector lenders.
The rating agencies downgraded the rating score on commercial paper after the company defaulted on debt payments. It was during this time when rating agencies involving ICRA and Crisil demoted DHFL’s worth of Rs 850 crore on commercial paper to ‘default’ from ‘A4’ because it had a mortgage lender’s deteriorating liquidity condition.
Breakdown of the DHFL Scam
The Resolution Plan
DHFL tried to make an impression in front of the investors that they would be repaying them the full amount. They devised a resolution plan that transformed its debt into equity and moved to the court in the hopes that it would influence their plan.
Raid by ED
Following the court case, DHFL couldn’t remain safe as they were raided by none other than the Enforcement Directorate itself. The ED made claims that they found several linkages to money laundering. This money has been used for their advantage, which was intimately associated with the company’s promoters, especially Dheeraj Wadhawan. They also found that this loan money was also linked to the criminal organisation, Dawood Ibrahim.
Removal of Board of Directors
By this time, DHFL had no longer had power and control and was bankrupted due to which the Central Bank of India decided to remove its board of supervisors and managers. The decision took place under Section 45-IE (I) of the Reserve Bank of India Act, 1934.
First Arrest of Kapil Wadhawan
This created sensational news when the promoter of the DHFL, Kapil Wadhawan was arrested under the Prevention of Money Laundering Act (PMLA). The ED had found out that his firm was allegedly involved in providing loans to the criminal association of Dawood Ibrahim.
Charge Against DHFL
Recently, the CBI finally booked DHFL and 13 others related to this case for swindling 17 banks of Rs 34,615 crore. They are undergoing investigation by both the CBI and the ED. The ED has stated that Yes Bank is also involved in this scam.
Scams like this can prove to cause huge damage to Indian investors. What can we learn from this is just that we need to have strong and stringent banking laws and policies. The country can only hope to see strict business and financial advisory groups without corrupted intentions.
It is quite evident from the above-mentioned facts the DHFL scam remains the biggest scam to date. The case is still undergoing, and we can only wait for the judgment to come out.
FAQs
Is the DHFL scam true?
Yes the DHFL financial scam is termed one of the biggest scams in the banking industry.
What is the DHFL scam?
DHFL has been charged for defrauding a total of 17 banks of over Rs 34,000 crore.
After the liberalization, banks are forced to adopt various banking services and change their approach toward customers in the competitive world. As we are in a modern era, where e-banking is a prevalent method of accessing your finance.
We know the level of security, as well as scams in banking, is tantamount. Especially, in this pandemic, many people have encountered a large number of complaints regarding fraudulent acts through online transactions.
Even in the case of Blockchain having a strong security base, it faces a lot of hackers, for instance taking the biggest hack of $600 million in 2021, which impacted a bad phrase for many investors.
Bank frauds are not similar to online malware, we could see many surveillance videos of robbers entering the premises and stealing money in the open air. So, fraudulent acts via banking are a common issue we face, even after imposing tight security. Here, in this article, you could see the top bank frauds we are facing in 2022.
Phishing is illicit conduct in which an attacker attempts to get access to a user’s website by sending spam messages in the hopes of tricking the victim into divulging sensitive information. Phishing can be carried out by sending fraudulent messages or installing harmful software on the user’s computer, such as Ransomware.
Phishing scam example
Furthermore, link manipulation is a Phishing tactic that involves creating misspelt links and URLs. As you see, you will receive plenty of emails saying ‘click the below link to download the software that ultimately leads you to a fraud platform.
2. Pharming Scams
Pharming is currently one of the most common cybercrime attacks in the world. Pharming, on the other hand, is the act of sending users to a malicious website or damaging the computer’s DNS server software. To put it another way, pharming is similar to phishing but does not involve tricking consumers into participating in the scheme.
In companies that host e-commerce and online banking services, it’s practically universal. The phrase “pharming” refers to the process of cultivating and obtaining confidential information from users.
It is a computer slang term for “farming.” Pharming is the use of DNS (Domain Name Server) software on a computer to alter the IP address of a legitimate website to one that is malicious. Finally, the user is redirected to a possibly dangerous website.
3. Technical Support Scam
Those who are accessing online banking consider the Technical support team as their last resort. where the victim customer shares their problems regarding technical to the technical team with the hope of solving it, thinking that you are conversing with the right staff, But You are not!.
This type of fraud occurs through social engineering, where the fraudster enables your personal computer and can gain confidential information.
4. Spoofing
Spoofing is a cunning form of fraud in which the fraudster convinces you that they are coming from reliable sources. For example, you may receive a call, email, or SMS from a trustworthy source stating that “Antivirus ware will remove the virus from your device by downloading an anti-malware link given below,” prompting you to click on the link, which will take you to another illegal website, potentially exposing your personal and financial information to the suspect.
5. SIM Swap Frauds
This scam is vulnerable to those who access anything on the internet with their phone numbers. As a result, scammers will easily activate a fake SIM card under the authentic users for fraudulent activities. On the whole, your phone number is the scammer’s as well.
One of the important elements of this scam is ‘two-factor authentication, where the OTPs (One-Time Password) that are sent to your phone number will be received by the scammers.
With enough data being collected from the users, the scammers will claim the users’ SIM cards from the mobile service under the excuse of being lost or broken. Consequently, the users’ SIM or phone number will be under the scammers’ control.
6. Skimming
Skimming is a common scam and crime in several parts of the world. This is an increasingly often happening scam especially in public places, like ATMs, Point-of-Sale, and fuel pumps.
Skimming Scam
This scam occurs when devices are illegally installed in public places. The result of this scam includes using the users’ data to create debit and credit cards under their name and then stealing the victims’ money.
The most common scam under Skimming is Fuel Pump, where the scamming prop is hidden inside the wiring. Meanwhile, unbeknownst to the users, the data will be transferred to the scammers’ storage within seconds.
7. Vishing
Vishing is also known as voice phishing. It is nothing but scam centers calling potential users to deceive money smartly. Telephone fraud involves tricking people into giving money or disclosing personal information when they answer the call.
The perpetrator of a vishing scam often pretends to be a member of a trusted company, institution, or government agency. Believing the credibility, the unwary victims are sometimes tricked into taking the impression that their computers are being infected and needed to install anti-virus software.
As a consequence, scammers will get into their software and extract data for their swindling endeavours.
8. Mobile Scams
As the name speaks, mobile scams are a range of scams that involve smartphones. Moreover, in this era of digitalization, everything from start to end is digitalized. Similarly, the scam is also digitalized. The above-listed scams- Mobile phone virus scams, SMS phishing, Voice mail scams, and One-ring scam are all part of mobile scams.
This type of scam is not rare or uncommon, it can take place anytime and anywhere, unless and until the user doesn’t hold a phone. Furthermore, this digital age has made this scam even more happening, since all our data including bank details, emails, and other credentials are associated with our phones.
In this way, the scammers will be capable of accessing the victims’ data through their smartphones effortlessly.
Conclusion
Scamming has become a day-to-day crime in this technological age. According to the reports, half of the bank scams are done through smartphones. However, it can be avoided by taking proper precautions and not unnecessarily accessing sensitive information with the mobile phone.
As we all know, our bank accounts are linked to our mobile numbers followed by a ‘two-factor authentication’ feature, so it is quite uncertain to find the real scammer behind all the bank scams.
On the other hand, the only solution to dodge bank scams is to always contact the administrator of the respective bank irrespective of the caller, who has asked for your information via phone.
FAQs
What are some of the common bank frauds in India?
Phishing, Pharming Scams, Technical Support Scams, Spoofing, SIM Swap Frauds, Skimming, Vishing, and Mobile Scams are some of the common bank frauds in India.
What is bank fraud in India?
Bank fraud is when a person illegally obtains money from the depositors possessing as the bank
