Tag: scams in india

The Crypto Scams in India – What Are They and How Are We Fighting?
The cryptocurrency market has found millions of investors in India over recent years. While people hesitated to invest in this relatively new asset class during the early years, the rising buzz and FOMO around cryptocurrencies made many join this bandwagon.

Unfortunately, this rapid growth didn’t attract investors alone. It also caught the attention of scammers. According to a report published by Inc42, Indians have been duped of over 72,000 crores by cryptocurrency Ponzi schemes.

The actual figure can be much higher since Bitconnect alone managed to scam people of over 80,000 crores. These figures are based on the investigative agency’s estimations and charge sheets filed against the key accused.

A significant problem with crypto scams is they are getting more sophisticated with time. Scammers are using varying modus operandi, like phishing, email scams, giveaway scams, etc., making it harder for people to secure their investments.

Although government agencies and popular crypto-exchanging platforms are trying their best to reduce such scams by spreading awareness, it hasn’t delivered the desired results.

Hence, this exhaustive guide has been prepared to help cryptocurrency enthusiasts and investors protect their investments. It aims to make cryptocurrency investors more aware of all the typical ways scammers use to dupe people of their cryptocurrency investments.

8 Types of Common Crypto Scams Duping People
Ways Investors Can Adopt to Avoid Falling Victim
Steps Taken by Government to Reduce the Crypto Scams
Securing Investment & Staying Vigilant Is the Way Forward

Is Everything in Crypto a Scam?

8 Types of Common Crypto Scams Duping People

People investing in cryptocurrencies must be cautious about their investment storage. Since most investors store their cryptocurrencies in online wallets, hacking instances are likely.

But investors can reduce the risks by becoming more aware of the ways scammers use to steal cryptocurrencies. Scammers can come up with numerous methods to dupe cryptocurrency investors. Still, the most common ways include the following:

1. Social Engineering Scams

An example of the social engineering scam

Investors who are highly social online and spend a lot of time on the internet can often become victims of social engineering scams. These scams involve psychological manipulation and deceit to gather sensitive information like cryptocurrency wallet details from the target. Social engineering scams make people believe they are dealing with a trusted entity.

Scammers start by identifying easy targets online and then developing angles to hook them. Once this step is done, scammers take as much time as needed to win the victim’s trust. It is done to make the victim reveal critical information or make him transfer a certain amount of cryptocurrency to the scammer’s wallet.

Investors participating in several cryptocurrency-related groups, forums, or online communities should be cautious of these scams. If any newly made connection asks to make cryptocurrency transfers or share investment details, view it as a red flag and disconnect immediately.

2. Romance Scams

An example of a crypto romance scam

Romance scams are not new. They have been a tool for scammers for years. Be it dating sites or matrimonial sites; scammers have spread their presence almost everywhere. People fall for romance scams because of the nature of the websites they meet the scammer.

Very few people would think of encountering cryptocurrency scammers on a dating or matrimonial site, and this notion makes a scammer’s work easier. Such scams make the victims believe they are in a reliable relationship and manipulate their emotions to gain an advantage.

Once the victim starts believing the scammer, the regular conversations switch to lucrative cryptocurrency opportunities. Such discussions, paired with the scammer’s manipulative tactics, lead to an eventual transfer of either cryptocurrencies or the revealing of account credentials.

3. Ponzi Schemes

Often known as ‘get rich quick schemes,’ the Ponzi schemes have made Indians lose crores. These schemes are often presented in different forms but have the same objective. Scammers often trick gullible people into investing in a non-existent company or product that promises enviable returns.

The GainBitcoin MLM scheme is its perfect example. This scheme promised a 10% monthly return on investment in the form of Bitcoin. As more people started to invest in this scheme, the key accused secretively changed the contract terms and started offering pre-mined tokens called MCAP instead of Bitcoin. MCAP had no value and was not listed on any exchange platform.

But people kept investing in this Ponzi scheme till it was too late. As a result, investors collectively lost over 20,000 crores to this scam. If any scheme offers unreasonably high returns, investors should stay away from it.

4. Defi Rug Pulls

These are the newest types of scams in the cryptocurrency space. Under this method, scammers use social media and messaging platforms to increase NFT project prices or cryptocurrency. Once people invest their money into the cryptocurrency or NFT project, the creators disappear with all the money.

One of the most popular Defi rug pull scams was the one around a cryptocurrency created on the popular South Korean Squid Games theme. Surprisingly, the cryptocurrency had nothing to do with the Squid Games series creator, but the scammers made it appear that way.

It helped them attract investors. Hence, one of the effective, best ways to prevent being a victim of such scams is by investing in cryptocurrencies or NFT projects with reliable credentials.

5. Fake Crypto Investment Schemes

Fake crypto investment scheme example

Similar to a Ponzi scheme, investors are made to invest in companies or cryptocurrencies that don’t exist. Morris coin is a very recent example of this scam. The creators of Morris coin presented it as a highly sophisticated cryptocurrency built using blockchain technology.

The investors were promised huge returns against their investment. But once the creators collected enough investments, they disappeared. When Enforcement Directorate (ED) conducted raids and initiated an investigation, they found no such coin existed.

It is just one example of a fake cryptocurrency investment scheme, many more exist. Scammers can lure people into investing their money into a project they have no intention of creating. Such scams can also be conducted by offering an Initial Coin Offering (ICO).

6. Fake Celebrity Investments

An example of a celebrity investment crypto scam

Cryptocurrency enthusiasts and investors who follow celebrities online are more vulnerable to such scams. The incidence of scammers hacking the Twitter accounts of various known celebrities is still not old.

Under this method, scammers either hack a blue-tick-verified social media account or create a replica of it. In both cases, the scammers then ask the followers to transfer some cryptocurrencies to the shared wallet details in exchange for lucrative returns.

Since the message appears to be from a celebrity, many fall for this scam. They initiate a transfer, expecting a return. Accounts of eminent personalities like Elon Musk were hacked earlier, and by the time the authorities received the accounts, people had already lost millions to scammers.

7. Pump & Dump

An example of pump and dump crypto scheme

The pump and dump scheme is an age-old scheme wherein the project creators use illicit ways to raise the price of a worthless asset in a short period. Once the price picks up, the entire asset is sold off in the market for a massive profit.

Even though pump-and-dump schemes are considered illegal under securities law, they are very commonly used in the cryptocurrency world.

Investors should be careful of investing in a relatively new cryptocurrency that shows unrealistic price growth in a shorter period. Anything that appears way good to be true should be avoided to prevent falling victim to such scams.

8. Phishing Schemes

Example of a phishing scam

Phishing scams are widespread, especially in the cryptocurrency industry. Various sophisticated phishing scams are carried out almost daily to gain access to investors’ cryptocurrency wallet keys.

These are the keys required to gain access to the funds or purchased cryptocurrency stored in the wallet. To initiate phishing scams, scammers send emails or messages on social media and messaging platforms.

These messages contain links to landing pages asking people to enter their wallet keys or other sensitive information. Since most of these landing pages look authentic, some fall for them and enter their wallet details.

Once the hackers get this information, stealing cryptocurrency becomes easier for them. A great way to prevent such scams is by always inspecting the URLs of the website.

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Ways Investors Can Adopt to Avoid Falling Victim

Cryptocurrency scams have been increasing over recent years. The only way investors can secure their investments is by being proactive. A significant portion of investors keeps their cryptocurrencies in the exchange’s digital wallet, which can get hacked.

There have been various similar incidents in the past that made investors lose millions. To prevent landing in a similar situation, relying on a cold wallet is recommended. These wallets look like USB drive and stores the investment away from the internet.

Besides using cold wallets, investors should also be careful about opening links from emails or messages from unknown people. Scammers often try to gain access to investors’ wallets by making them click on fraudulent links, so staying away from seemingly doubtful links is recommended.

Investors eyeing new ICO launches should always conduct deep research to ensure they don’t invest in scam projects. In a nutshell, the more cautious you are with your investments, the better.

Steps Taken by Government to Reduce the Crypto Scams

Currently, there is no strong legislation to regulate the cryptocurrency market, and scammers take advantage. However, the rising number of complaints and increasing scams have raised alarms, nudging authorities to take strict action.

To reduce fraudulent activities, RBI released a circular in 2021 addressing all concerned entities to carry out a due diligence process before allowing anyone to engage in cryptocurrency trading.

The due diligence has to be in line with the regulations governing the standards for Combatting Financing of Terrorism (CFT), Know Your Customer (KYC), Prevention of Money Laundering (PMLA), and Anti-Money Laundering (AML).

Besides asking entities to follow rigid regulations, the government is also trying its best to spread awareness regarding the different ways scammers use to dupe cryptocurrency investors.

The Ministry of Home Affairs of India runs a Twitter handle named ‘Cyber Dost’ to spread awareness of cybersecurity and safety issues. In 2021, this handle shared valuable tips to help investors secure themselves against rising cryptocurrency frauds. Some of the tips asked the investors to:
- Not fall for offers that appear too lucrative
- Be vigilant and carry out research before making any investment
- Be careful of fake endorsements, etc.
Cyber Dost Twitter page

The awareness posts also asked investors not to make online payments to strangers via gift cards or online transfers. While the government may plan to come up with a bill to regulate the cryptocurrency market in the future, it will always rely heavily on organizing awareness campaigns to educate investors about the prevalent scams.

An informed investor is unlikely to fall for cryptocurrency scams, so the government is trying its best to educate investors. People can expect to see some strong laws in their favor in the future, but till then, they will have to exercise due diligence while dealing in the cryptocurrency market.

The above graph shows the number of times the crypto scamming websites were visited by Indians in millions

Securing Investment & Staying Vigilant Is the Way Forward

One of the best things that attracted people to cryptocurrencies was their decentralized nature. The option to transfer cryptocurrencies while maintaining anonymity was another magnetic feature. While the developers created these USPs to benefit investors’, scammers were quick enough to find ways to use them as loopholes.

Over the years, cryptocurrency investors have lost investments worth millions. These scams were in the form of Ponzi schemes, phishing scams, giveaway scams, and more. These scams are only getting more advanced with every passing day. Hence, the only way left for investors’ to secure themselves against such scams is by being vigilant and proactive.

Not getting attracted to ICOs that promise massive returns, not opening malicious links, and avoiding fake endorsements on social media are some of the ways investors can use to stay safe. Other than these, trading with popular crypto exchanges and using cold wallets to store cryptocurrencies can be used as additional safety measures.

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Conclusion

Cryptocurrency has become a new way for investors to earn money while simultaneously it is also regarded as an alternative method to traditional currency. But the prime issue with cryptocurrency is that it involves cyber threats and cyber frauds as all the currency is in digital form only.

The article highlights the types of crypto scams in India and the things investors need to keep in mind while using cryptocurrencies. The article also highlights the steps taken by the Indian government to tackle such situations and lower the scam rate.

FAQs

What are the safest crypto sites?

Some of the safest crypto sites are Kraken, Gemini, Coinbase, Crypto.com, and Binance.

Can crypto be stolen from a wallet?

Yes, with the use of advanced technologies combined with needed knowledge, cryptos can get stolen from the wallet. Some of the most common examples are exchange hacks, exit scams, phishing attacks, etc.

How do hackers steal your crypto?

The hackers can steal the crypto by using their hacking knowledge in order to gain access to the user’s account and can then get it transferred or used as per their desire.

Can crypto be traced by police?

Few cryptocurrencies can be traced by the police by their transactions. But overall, digital currency is difficult to be traced due its digital pattern. The blockchain technology used by Bitcoin makes it much easier to trace the transactions of Bitcoin but it is quite difficult to identify the receiver or sender.
January 1, 2023
International Call Centre Scam Businesses in India | How They Scam People?
The BPO (Business Process Outsourcing) industry entered India in the 1980s when American Express set up its back-office operations in Gurgaon, now Gurugram. Since then, it has witnessed regular growth year on year.

The Indian Call Centre market, in 2017, was valued at a whopping USD 28.19 billion. There are various factors contributing to its exponential growth.

These include government schemes to promote the industry, growth in English and other multiple language-speaking populations, skilled professional to provide support in a multitude of business operations, low cost of employment with a high-quality workforce, specialized call centre outsourcing services, latest technologies, high-end infrastructure, Availability of a younger workforce, and Readiness to work in shifts.

India’s biggest and most renowned call centre players are Infosys BPO, Tata Consultancy Services BPO, WNS Global Services, Wipro BPO, Aegis Limited and a few others.

International Call Centre Scam Businesses in India
How to Prevent Falling for International Call Centre Scams?

Top Spammers in India in 2021

International Call Centre Scam Businesses in India

Along with the good, also comes the bad. With the Call Centre industry shining bright, there is a black shadow that follows it too.

There have been various cases over the years that have garnered media attention for defrauding a vast majority of people for money.

“Call Centre Fraud in Bengaluru: 73 employees were paid in cash, ferried in ‘school buses’

It was just recently in July 2022, when the newspapers screamed this headline. The Bengaluru police, acting on an anonymous tip, raided an office in the Whitefield tech area posing to be a legitimate call centre.

They seized everything including the transcripts that were being used to target and defraud American citizens and compromise their bank accounts. They were operating three different setups to facilitate money routing. To escape suspicion and to keep operating, the company would pay its employees in cash rather than a direct bank deposit.

What was the Scam?

The technique for the gang was a three-layered stack-up. Callers, bankers and closers. The callers would reach out to potential targets via text messages or voice mails stating they were noticing strange and possibly fraudulent activity on their bank or eCommerce accounts.

Any attempts by the targets to cross-check these calls would be routed to the second facility, which was the bankers. The bankers, posing either as bank executives or eCommerce executives, would engage the target to determine if he or she would fall prey to the scam. This was followed by the closers who would take over and the final money transaction would occur.

“Fake Call Centre Scamming US Nationals Busted In Mumbai; 3 Arrested”

Just a couple of months ago, in May 2022, the city of Mumbai was in the news for one more call centre scam. The Mumbai police, acting on a complaint, raided a business park in the Thane area and arrested three people. They were running a call centre with the intention of defrauding US citizens.

What was the Scam?

The trio that allegedly ran a call centre, posed as representatives of a reputed pharmaceutical company. They would call US citizens via Voice over Internet Protocol (VoIP) and offer medicines, including Viagra, at concessional rates. Those who would fall to pray, would share their credit card details, make the payment and never receive any medicines. The trio has cheated many US citizens through this scam.

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20 Billion USD Call Centre Scam in Kolkata

20 Billion USD Call Centre Scam Exposed by YouTubers

“Kolkata epicentre of USD 20 billion call centre scam? Video by YouTube sleuths goes viral” – read the newspaper headlines in early May 2022.

In a reverse fate, US YouTuber, Mark Rober, recently exposed a USD 20 billion call centre scam based in Kolkata, India.

What was the scam?

In a 26 minutes video, Mark Rober documented and exposed four call centres – 3 in Kolkata and 1 in Gurugram that have been engaging in activities designed to fraud foreign citizens. He alleged that around 60 million people around the world have been swindled out of approximately USD 20 billion by these call centres.

He collaborated with two other YouTube creators, Jim Browning and Trilogy Media and through careful planning and infiltration, they gathered audio and video evidence. They went on to demonstrate how these call centres carefully choose their victims (usually over the age of 65) and initiate contact impersonating government officials, eCommerce executives or even digital antivirus companies. They manipulate their targets into transferring money either through threats or false sales.

Rober has shared footage from the premises, real-time videos of people getting scammed and the names of the people at the helm of such fraudulent set-ups. His video got the attention of many and soon garnered 11 million views raising concern among the people regarding cybersecurity. The last known was that the evidence has been shared with the Kolkata police who are looking into the matter.

“US authorities charge 6 Indian call centres, directors in the alleged scam”

In early February of 2022, this headline caught the attention of many. As many as six India-based companies and their directors conspired with E Sampark, a company that provides internet telephone services, to forward scam calls to American citizens.

All six companies, their directors and the director of E Sampark have been charged with conspiracy and fraud with charges filed against them in an Atlanta court.

What was the Scam?

Posing as government officials for pension schemes, these callers issued threats to people indicating that their PAN numbers were used in a crime. Sometimes, they would even pose as income tax officials, telling people they owed back taxes to the government.

Gullible individuals would then be directed to pay money to a network of individuals who then, laundered the funds overseas. In yet another attempt, callers would offer loans and make people send payments as fees to get their bank information.

U.S. Attorney Kurt Erskine said in a statement, “Scam robocalls cause emotional and financial devastation to victims, particularly our vulnerable and elderly populations,”. “These India-based call centres allegedly scared their victims and stole their money, including some victims’ entire life savings.” He further added.

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How to Prevent Falling for International Call Centre Scams?

Size of the Fraud Detection and Prevention (FDP) Market Worldwide from 2016 to 2022

Where there are thriving call centre businesses, there are also scammers who prey on the elderly or the non-tech savvy. There are several steps that people can take to ensure that they don’t fall prey to such frauds. These include:
- Be wary of receiving unknown callers or unidentified numbers.
- Block unwanted calls and messages.
- Do not ever give out personal or financial information in response.
- Resist the pressure to act immediately to lure.
- Do not pay, especially to a request to pay in a specific way.
- Do not access unverified links.
Conclusion

India’s call centre industry is huge and growing exponentially. Liberal government laws are helping and fuelling the growth. But, along with the growth, the dark part of fraudulent practices also exists. With the help of the ever-evolving behemoth that is technology, fraudsters are continually coming up with innovative ways to scam and defraud people. What we can do is remain vigilant and have basic safeguards against such callers. Just remember – “If it sounds too good to be true, it probably is.”

FAQs

How do spammers get my cell phone number?

Our phone numbers are present in many places over the internet like social media accounts, websites, and more. Spammers use processes like web harvesting or web scraping to extract our phone numbers from the web.

Can someone hack my phone by calling me?

A hacker cannot directly hack your phone by calling you. However, they can get access to your personal details by pretending to be someone else which can ultimately enable them to hack your accounts online.

How does a call centre scam work?

Most commonly, the scammers of a call centre scam target vulnerable people like the elderly or the ones not acquainted with the technology. Scammers try to extract personal details from such people by pretending to be some official authority. In this way, they tend to stir fear and steal money from people.
August 22, 2022
DHFL Scam – The Complete Breakdown of the Biggest Scam in Indian History

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.

Background of DHFL
The Reveal of the DHFL Scam
Breakdown of the DHFL Scam

Background of DHFL

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.

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Conclusion

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.

Who is the owner of DHFL?

Piramal Group is the parent company of DHFL.

July 7, 2022
Top 6 Bank Frauds of 2022 That You Should Be Aware Of

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.

1. Phishing
2. Pharming Scams
3. Technical Support Scam
4. Spoofing
5. SIM Swap Frauds
6. Skimming
7. Vishing
8. Mobile Scams

1. Phishing

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

July 3, 2022
AGB Shipyard Fraud: How the ‘Biggest Banking Fraud of India’ Was Unfolded?

ABG Shipyard has been making news in recent days. The scam by this shipbuilding business has not only placed the Narendra Modi administration under scrutiny but has also thrown the opposition and the Modi government into a political fight. The ABG Shipyard Limited, a Gujarat-based shipbuilding enterprise, was accused of defrauding a consortium of 28 banks, including the State Bank of India (SBI), IDBI, and ICICI, for Rs 22,800 crores.

Know more about the scam in this article.

About ABG Shipyard
AGB Shipyard Fraud: How Did the Fraud Come to Light?
AGB Shipyard Fraud: Actions Taken by SBI Against the company
AGB Shipyard Fraud: Banks Involved in the Case
AGB Shipyard Fraud: Why Is It Considered As India’s Biggest Bank Fraud?
AGB Shipyard Fraud: Timeline of the events

About ABG Shipyard

Without a doubt, ABG Shipyard is the largest private shipyard in India. The organisation has a large client base around the globe. They are the first to create all-aluminium jet-propelled watercraft that are powered by diesel-electric dynamic ships.

The company’s registered office and yard are both located in Surat, Gujarat. The company’s first ship was delivered in the year 1990. In the 15 years after its inception in 1991, the firm has grown to become India’s largest private sector shipbuilding yard, with a global client base of happy clients.

AGB Shipyard Fraud: How Did the Fraud Come to Light?

Based on a complaint from the State Bank of India, the Enforcement Directorate filed a money-laundering investigation against Gujarat-based ABG Shipyard, which has been described as being implicated in “India’s biggest bank scam in history.” The company’s chairman, Rishi Kamlesh Agarwal, has been questioned by the CBI for defaulting on loans of Rs 22,842 crore that ABG Shipyard obtained from 28 banks.

According to the CBI, a forensic audit conducted by Ernst & Young in 2019 indicated that funds were diverted to other linked firms, with loans reportedly being utilised for investments through offshore subsidiaries. According to the examining agency, these loans were not utilised for the intended purpose, thereby breaking the agreements.

AGB Shipyard Fraud: Actions Taken by SBI Against the company

On November 8, 2019, the SBI filed a complaint on a very serious note in order to get strong clarifications, and on March 12, 2020, the SBI requested explanations too. In August of that year, the bank filed a new case. The CBI moved on the complaint after “scrutinising” it for over a year and a half, registering the FIR on February 7 this year.

The SBI said in its lawsuit that the problem was caused by the global economic slump and the shipbuilding sector, according to the news agency Press Trust of India. It had “affected the shipping sector as a result of a drop in commodities demand and prices, as well as a drop in cargo demand.”

AGB Shipyard Fraud: Banks Involved in the Case

According to a case filed by the State Bank of India, AGB Shipyard owes the bank 2,925 crores, ICICI Bank 7,089 crore, IDBI Bank 3,634 crore, Bank of Baroda 1,614 crore, Punjab National Bank (PNB) 1,244 crore, and Indian Overseas Bank 1,228 crore (IOB).

According to CBI, the funds were utilised for reasons other than those for which they were given by banks. The Enforcement Directorate (ED) has opened a second money laundering inquiry into them.

The Curious Case of Ex-NSE Chief, Chitra Ramkrishna and Himalayan Yogi

Chitra Ramkrishna, an Ex-CEO of NSE was arrested in the Himalayan yogi scandal. Know about the complete story and allegations against her.

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AGB Shipyard Fraud: Why Is It Considered As India’s Biggest Bank Fraud?

Previous diamond merchant Nirav Modi and his uncle Mehul Choksi’s scams totalled about Rs 14,000 crore, while Vijay Mallya’s fraud was Rs 9,900 crore. The case of AGB Shipyard has crossed amounts of all the previous scams in history.

Former Chairman and MD of ABG Shipyard Limited Rishi Kamlesh Agarwal, former executive director Santhanam Muthaswamy, and directors Ashwini Kumar, Sushil Kumar Agarwal, and Ravi Vimal Nevatia have all been charged by the investigating agency and the officials. Meanwhile, searches have been carried out in 13 ABG Shipyard facilities.

ABG Shipyard is the subject of a forensic audit that was organised and conducted by Ernst & Young LLP. Between April 2012 and July 2017, it uncovers evidence of fraud. According to the audit, fraud was committed through “finances diversion, theft, and criminal breach of trust, with the goal of gaining unlawfully at the expense of the bank’s funds.”

ABG Shipyard received loans from 28 institutions in the form of three distinct types of loans. The funds generated from these loans were subsequently funnelled through 98 sister concern firms for mostly personal benefit.

AGB Shipyard Fraud: Timeline of the events

1985: The ABG Group’s flagship enterprise, ABG Shipyard Ltd, was founded. It was run and operated by Rishi Kamlesh Agarwal and is in the shipbuilding and repair industry, with shipyards in Gujarat’s Dahesh and Surat cities. It is financed by a consortium of 28 banks, with ICICI being the principal bank.

2005-2008: Despite warnings of danger from the global financial crisis of 2008, banks continue to lend grandly to ABG Shipyards.

2008: The worldwide financial crisis, which was sparked by the housing bubble in the United States and the fall of Lehman Brothers, affected ABG Shipyards.

2014: Under corporate debt restructuring, or CDR, SBI tries to restructure debts to ABG Shipyard. The reorganisation failed terribly because ABG Shipyards was unable to pay the interest and instalments on time and with parity.

2019: SBI identified the fraud in January 2019.

2020: SBI filed a complaint in 2019 and then again a detailed complaint in 2020.

2022: ABG Shipyard and ABG International Private Ltd are both booked by CBI. According to the CBI’s FIR, ABG SL owes a total of Rs 22,842 crore.

The CBI has issued lookout notices for Rishi Agarwal, ABG executives Santhanam Muthuswamy and Ashwini Kumar, and founder Rishi Agarwal.

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Conclusion

Meanwhile, the opposition, led by the Congress party, had accused the Narendra Modi administration of participating in “India’s biggest bank fraud” of Rs 22,842 crore, which is larger than Nirav Modi and Mehul Choksi’s PNB scandal of Rs 14,000 crore and breaks the history of scams. The BJP government at the Centre pointed out that the fraud occurred during the UPA administration, the Congress retaliated by questioning why it took the CBI and SBI nearly seven years to find the crime. Along with that, the banks are in a terrible position of attempting to recoup their losses.

FAQ

What happened to ABG Shipyard?

The CBI has filed a complaint against ABG Shipyard for cheating 28 banks of Rs 22,482 crores.

Who is the owner of ABG Shipyard?

Rishi Kamlesh Agarwal is the owner and chairman of ABG Shipyard.

March 10, 2022
The Curious Case of Ex-NSE Chief, Chitra Ramkrishna and Himalayan Yogi

NSE or the National Stock Exchange is one of the most famous institutions in India. As the name suggests, it is the National Stock Exchange of India, which is one of the apex institutes for investors in the Indian land. It is prestigious and holds upright the fundamentals and morals of the investors. The existence of the NSE can be attributed to some people and Chitra Ramkrishna was one of such names that come together with the stock exchange. Ramkrishna was selected to create NSE from scratch and has served as the CEO of NSE between 2013-2016. However, it is the co-location scam case of the NSE that she has now taken the centre stage of.

There are some people who are always present in every institution who try to manipulate the power and authority given to them in ways that are unethical or corrupted. They can be found in private, as well as public bodies. They can be found in banks, formal institutions, government propagated social institutions, These manipulators are present in almost every organisation you can think of.

There will always be people like these who try to manipulate the general public with the use of their authority or power. No institution is left without these people, even the NSE. There is a curious case of the National Stock Exchange with a person who used her power to do some fishy things. The case came out in the news and got a really big headline. However, most people still don’t remember the case in its entirety.

Here, in this article, we will see who was the fraudster behind the National Stock Exchange and what were the allegations that were posed to her. There are many twists and turns in its story that can even make a good story plot. Let us see how the case started and then slowly unfolded before the eyes of the law. Let’s unfold the complete Chitra Ramkrishna and NSE co-location case.

A Brief about Chitra Ramkrishna NSE Co-location Case
Who is Chitra Ramkrishna?
What are the Allegations Against Ex-NSE Chief Ramkrishna?
CBI Investigations in the NSE Case
The Penalties and Orders by SEBI
The Mysterious ‘Himalayan Yogi’

A Brief about Chitra Ramkrishna NSE Co-location Case

Before we go deep into the series of events that led to the eventual reveal of the big case, let us see the case at a glance. Here we will be discussing, what according to the news, the story was and how the case unfolded before everyone and how people are reacting to it. Let us see what was the issue that caused the fire to ignite. So this here is the co-location case in brief.

The National Stock Exchange, which is one of the oldest stock exchanges in the world, took a toll on its MD and CEO. Chitra Ramkrishna, who is the Ex-Managing Director and the Former Chief Executive Officer of the National Stock Exchange was accused of misusing her power.

It was alleged that she used her power and authority in the NSE to make some inapt appointments, which eventually lead to disruption of secrecy of the exchange. It was also said that there was an information leakage, which was to be concealed but she failed in doing so.

Another claim was that she was the one who made some incorrect and misleading submissions to the SEBI. The Securities Exchange Board of India was also seen stating that Chitra’s spiritual guru influenced her in doing the actions she was accused of. The ‘Himalayan Yogi’ mentioned was unnamed and unknown to the news and the media. All these were the claims that clouded the sky for Chitra Ramkrishna in the past.

The consequences of these actions were quite easy to see. The CBI or the Central Bureau of Investigation was the body that questioned her after the acquisitions and found out various fishy arrangements.

The CBI, during its enquiry, also issued some circulars against the Ex-Chief executive officer, Ravi Narain, who was her predecessor. It was also reported that the Central Bureau of Investigation also ordered circulars against the former GOO (Group Operating Officer), Anand Subramanian.

Who is Chitra Ramkrishna?

Chitra Ramkrishna is not a familiar name but in the world of finance, she is really well-known as a person. She is the former Managing Director and the Ex-Chief Executive Officer of the National Stock Exchange. She started her career as a Chartered Accountant. As she started and sailed through her career, she brushed some finance in her life.

Chitra Ramkrishna

In 1985, she IDBI (Industrial Development Bank of India). As her career and life moved forward, she got a short and brief notice period at the SEBI. After that brief work at the Securities Exchange Board of India, she returned to IDBI after two years. This was the time near the beginning of the NSE. She was eventually picked by SS Nadkarni, who was the then IDBI chairman, to establish the National Stock Exchange from zero.

What are the Allegations Against Ex-NSE Chief Ramkrishna?

By now you must have got an idea about the person who is at the centre of this case. Now is the time to understand the case and the allegations it posed towards Chitra Ramkrishna.

Starting from the beginning, Chitra Ramkrishna was appointed as the Managing Director and the chief executive officer on the first of April, 2013. She was worthy of the title and the post and designation that she received.

After her joining as the MD and CEO of the National Stock Exchange, she thought of appointing a person as the CSO (Chief Strategic Officer) for the exchange. Mr Subramanian was the person who was chosen for the post and this decision shocked everyone.

The reason why the decision shocked everyone was that the person, or the newly selected CSO, Mr Subramanian had no clue what stock and the capital market was. He had no prior exposure to the world of capital markets. He was Vice President of a leasing and repair service at an enterprise called Transafe Services private limited, before joining as the CSO for the exchange.

The Securities Exchange Board of India mentioned in a document that the person chosen for the job role had no prior exposure to capital markets. The selection of this candidate is subject to raising all the eyebrows in the room. The consultancy position for which Mr Subramanian was selected did not suit his prior life.

More than this, Subramanian’s salary at his last workplace was Rupees 15 Lakhs, which was now raised to a whooping 1.68 Crore rupees. This jump in the salary of Mr Subramanian from the last workplace to the National Stock Exchange was unjustified and abnormal.

Not only this, he was asked to work four days a week with all the benefits multiplied on his behalf. After all the appraisals and all the multiplied performance ratings, his compensation rose to 4.21 crore rupees just within two years. After all the eyebrow-raising and the magical promotions, he was redesigned to work as the GOO (Group Operating Officer) and Adviser to the Managing Director.

All of this and in the research and investigation, it was found that the exchange had no vacancy for the appointment of a CSO. Yes, The exchange never needed a Chief Strategic Officer, it was never advertised.

Chitra Ramkrishna not only appointed a person as a CSO but she also compensated him with exaggerated numbers and metrics. Remember, this is happening at the National Stock Exchange. This is a huge blow to the regulations and regulators.

Another claim or allegation that Chitra faced was this. The SEBI found out that the former chief (Before Chitra) was also guilty of spreading secret information for the exchange out in the open.

The information which is being regarded as confidential includes, some financial documents, organisations working model, dividend payout ratio and the board meeting consultations. All of this information was leaked in some sense or the other, by the ex NSE Chief who was said to have been following orders of her spiritual guru who remains unknown at the moment.

Chitra Ramkrishna and the board of directors were found guilty of not informing the regulator about the doings and leaking in the organisation. The regulator, in reply, asked both Subramanian and Ramkrishna to surrender their designations. Subramanian left the office officially in October 2016, followed by the surrender of Chitra Ramkrishna in December 2016.

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CBI Investigations in the NSE Case

The former chief of the National Stock Exchange has been examined for the case that was resisted in May 2018. The central bureau of investigation took the matter into its hands and are enforcing whatever it can.

According to the investigations of the CBI, it was found out that, the former member of the board had got access to the back servers of the exchange. This point of contact with the servers led to the control and manipulation of confidential and important data on the servers. This led to something similar to ‘Insider trading’ in the stock market.

When information travels asymmetrically, or faster to some people, they can use it to earn some abnormal gains. The brokers held unfair access between December 2012 to May 2014.

“Stock exchanges as institutional mechanisms have an important role to play in ensuring the stability of the financial and economic system,” the Bombay HC order had said.

In that light, Ramkrishna as the then-NSE chief is accused of financial misleading, concealing of information, and improper conduct. She was arrested in the co-location scam case on 6 March 2022, Sunday evening.

The Penalties and Orders by SEBI

Watching all the fraud play unfold, SEBI or the Securities Exchange Board of India made some orders and punishments to the offenders. According to the orders of the Securities Exchange Board of India, Chitra Ramkrishna has been denied to deal in stocks.

She will never trade in any of the securities, intermediate or with any clearing corporation for a period of three years. She is also ordered to pay a penalty of 3 Crore Rupees for the damage that has happened due to the bad governance.

For the denied time of 3 years, Mr Subramanian was also ordered to restrain himself from associating with any sort of market infrastructure institution. He has to stay away from the world of the market for the specified time and he has been ordered to pay a fine/penalty of 2 crore rupees.

On the market organisation of the NSE, it was ordered that the National Stock Exchange will not launch a new product or service for the next six months. Moreover, the NSE has been directed to leave/forfeit the excess leave encashment (cash in lieu of leaves) in 1.5 crore rupees and the deferred bonus of 2.8 crore rupees that the exchange owed to Ramkrishna. The forfeited amount that the NSE ordered to leave was to be utilised in its investor protection fund trust.

Other than these two people who were the centre of the storm of the fraud? there were more. The other three people who were also involved in the events were also penalised. They include Mr Narain who was the then president, A Company Secretary named J. Ravichandran, and the former regulatory officer J Ravichandran of violating some sections.

Those violated sections included the 15HB of the Securities Exchange Board of India Act 1992. Section of 23A and 23H of the securities contract Act 1956. In this case, not just president Narain was penalised but also the whole exchange was penalised. Both Narain and the National Stock Exchange were penalised with a penalty of 1 crore rupees.

The Mysterious ‘Himalayan Yogi’

This is probably the most amusing character in the case. He is a yogi who was said to be the person who was influencing the minds of the accused people. Both the people, Ramkrishna and Mr Subramanian, were at the centre of the case of misleading and making some confidential information open to the public.

Both of these parties, even after the trials and all the investigations, believe that the yogi is real and legitimate. They were seen mentioning that the spiritual guru they were talking about was a ‘Siddha purush’ or a ‘paramhansa’, which means a truly accomplished (Enlightened) being.

According to the former NSE chief, the spiritual guru has no physical coordinates and it is impossible to trace him. He is a guru that can only be found after you manifest at your own will. She also said that she met him twenty years ago on the banks of river Ganga. The yogi then gave her an email address for contacting him in the future.

All these claims were baseless and proved to be guilty of both the parties at the National Stock Exchange. SEBI, however, denied believing that the spiritual guru was fake, in fact, it said that it was a real person and the erstwhile Exchange chief went on several vacations with the guru. This proves the fact that the yogi is a real and legitimate individual.

It is the entity that makes the whole story a crooked one. Especially in a country like India, where gurus and pundits are celebrated and worshipped like demigods, this case does not stand differently. If this yogi analogy is a lie in the case, then it is very cunning on the sides of both Ramkrishna and Subramanian.

Confrontation with the Yogi

The Ex-NSE chief Chitra Ramkrishna was accused of several major lapses at NSE, which is the largest of the stock exchanges in India, and accused of making monumental decisions on behalf of the organisation under the influence of a Himalayan Yogi. She was later arrested for the charges pressed against her on March 6, 2022, and was eventually sent to a seven-day CBI custody on March 7, 2022.

As far as the reports go from the CBI sources, the Himalayan Yogi has been identified to be the former Group Operating Officer (GOO) of NSE, Anand Subramanian, who has been recorded with evidence of over 2,500 email exchanges with Chitra.

In order to reveal some more details regarding the case, the investigating agency requested the court for some questioning and confrontation with Chitra. This led to the questioning of Chitra Ramkrishna with her former aide, Anand Subramanian by her side, however, this shockingly didn’t dig up more mud, instead, Chitra refused to recognise him.

As per the reports, the controversial appointment of Anand Subramanian as the Chief Strategic Adviser and his later elevation to the Group Operating Officer and Adviser to the MD were all prompted by the mysterious guru.

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Conclusion

This was the NSE co-location case that involved Ex-CEO and MD Chitra Ramkrishna. It was curious to see that people at such a high latitude of responsibility and authority fall prey to some gurus. And who knows if the guru is a legit person or a mere proportion of fake images, or mirages created by the fraud minds.

Chitra Ramkrishna and Mr Subramanian were found guilty of deep corporate governance frauds, which led to their denial from the exchange and the market for three and two years respectively.

They were also ordered to pay a hefty penalty of crores. This case, which can also be a script for a movie, was a very interesting case. This shows how people at the top of some institutions can really be cunning, as opposed to their stature and the magnitude of responsibility that they have to bear.

FAQs

Who is Chitra Ramkrishna?

Chitra Ramkrishna is the Former CEO and Managing Director of the National Stock Exchange (NSE), who is currently identified as the center of the co-location case scam of NSE.

What has Chitra Ramkrishna done in the co-location scam case?

The former CEO and MD of NSE, Chitra Ramkrishna has been charged with some major governance lapses at the NSE by SEBI. She has been accused of taking some major decisions under the influence of a Himalayan Yogi.

Who is the Himalayan Yogi?

The CBI sources have identified this Himalayan yogi to be none other than Ramkrishna’s former aide and Former Group Operating Officer at NSE, Anand Subramanian. According to reports, the decisions of Ramkrishna were influenced by the Yogi.

Who is Anand Subramanian?

Anand Subramanian is the Ex-Group Operating Officer of NSE and the Former Chief Strategic Adviser and an Adviser to the MD of NSE. He is the one who is currently discovered to be the Yogi in the co-location scam.

What is co-location?

Co-location is a term that designates dedicated spaces in the exchange building, which are positioned next to the exchange servers. Co-location spaces witness high-frequency and algo traders who can place their systems or programs.

In co-location facilities, a third party can lease a rack/server space along with other computer hardware. These facilities extend a wide range of infrastructures like power supply, bandwidth, and cooling, which greatly helps in setting up servers and storage of data.

What is the co-location scam of the NSE?

The NSE Co-location scam is the recent market manipulation at the National Stock Exchange, which involves several top officials of the NSE including Chitra Ramkrishna and Anand Subramanian.

Who is the first woman MD and CEO of the National Stock Exchange?

Chitra Ramkrishna was the first woman MD and CEO of the National Stock Exchange.

Why was Chitra Ramkrishna arrested?

Chitra Ramkrishna was arrested by CBI on 6 March 2022 in the NSE co-location scam.

What is the current update regarding the co-location scam of NSE?

The former NSE Chief Chitra Ramkrishna has been arrested on March 6, 2022, and has been sent to a seven-day CBI custody on March 7, 2022.

March 7, 2022
The Revival of Punjab-Maharashtra Co-operative Bank

PMC bank became the talk of the town when it issued an EoI (expression of interest) in order to identify suitable equity investors/group of investors to take over management control and revival of its current state. The EoI was issued in November 2020 and has to be submitted to the RBI by December 15.

The Scam

PMC has been under regulatory restrictions since RBI found irregularities in its financial operations and hiding and facilitating loans to Housing Development Infrastructure Limited (HDIL). Rs. 6200 crore have been exposed to HDIL in this matter. In 2019, Economic Offences Wing (Eow) of the Mumbai police, arrested PMC’s former managing director Joy Thomas in connection with the fraud. The promoters of HDIL, Rakesh Wadhawan and Sarang Wadhawan, too have been arrested and are currently in jail, facing money laundering charges.

RBI found financial irregularities in its transactions and imposed regulatory restrictions

PMC’s total deposits sum up close to Rs 10,800 crore, advances up to Rs 4500 crore, and gross non performing assets of Rs 3500 crore as on 31st March 2020. The bank has a share capital of Rs 293 crore but registered a loss of Rs 6800 crore during the year 2019-20. It has a negative net worth of Rs 5800 crore.

The Revival

In a letter to the bank’s customers and stakeholders, RBI appointed administrator A K Dixit said that the bank has already rolled out various steps in order to recover from its current state. Recovery of bad debts, cutting costs and expenses, rationalizing several branches are a few of the steps taken on the revival front. Essential IT systems are being retained, staff expenses are being kept under a strict check and various means are being found to console the stakeholders and especially the depositors.

RBI kept a strict check on its costs and expenses

The administration stated that the bank is currently rolling out Rs 1 Lakh to all its depositors. Other than that, hardship payments of Rs 5 lakh are being made to those with Critical or life-threatening ailments like Cancer, Covid-19, ailments related to heart, kidney etc.

A particular development has been observed during the revival process that 20 percent of the bank’s nine lakh customers haven’t withdrawn the entire sum of Rs 1 lakh. It looks like a silver lining in the days of doom as there are a few customers that believe that the bank is going to make it through this mess.

Required Investment

Potential investors have proposed to convert PMC bank into a small financing bank but first, it will have to meet the regulations and an approval by the RBI. The administration is reviewing several options of investments for bringing the bank back to life.

RBI is looking for potential investors for the bank’s revival

Currently, with a negative net worth, the bank will need Rs 5800 crore to bring back the net worth to zero and another 1000 crore to maintain the adequacy ratio of 9 percent to restart the business.

Further proceedings

Administrator will weigh pros and cons for each investor and give recommendations to RBI

Initially, four entities had shown interest in investing but only three entities have submitted their interest in the revival of PMC so far. Mumbai based Surindar Mohan Arora (Ideal Group) is understood to have submitted the LoI (letter of intent). Identities of other entities have not yet been ascertained. The last date for submitting the LoI was December 15 2020. An extension has been granted and the investors have been given February 1, 2021 as the final date to submit their final offer. The RBI administrator A K Dixit will be studying the plus and minuses of all the Letters of intent. After their recommendations, RBI will take a call on which entity is suitable for taking over the management control and commencing day to day operations of the bank.

February 11, 2021