Five Biggest Financial Scams In India

Can you name some of the biggest financial scams in Indian history? India, like any other country, has witnessed its fair share of financial scams that have left a lasting impact on its economy and society. From fraudulent investment schemes to corporate frauds, these financial scams have not only resulted in substantial financial losses but have also eroded public trust in the financial system.

In this article, we delve into the dark underbelly of Indian finance to uncover the stories behind the five biggest financial scams in Indian history. Join us as we explore the tactics, consequences, and lessons learned from each of these notorious scams.

Biggest Financial Scams in India

Here’s a detailed list of the largest financial scams in India that left a hole in the Indian economy.

1. Harshad Mehta Scam

Harshad Mehta: the biggest financial scams in Indian history

The Harshad Mehta scam, which unfolded in the early 1990s, remains one of the largest financial scams in Indian history. Harshad Mehta, a stockbroker, manipulated the stock market by exploiting loopholes in the banking system. Mehta used the practice of “circular trading” and took advantage of the lack of transparency in the banking sector to inflate stock prices artificially.

The impact of the Harshad Mehta scam was far-reaching, leading to a stock market crash and a loss of investor confidence. The scam revealed the vulnerabilities in India’s financial system and highlighted the need for robust regulatory mechanisms and stricter oversight to prevent such fraud.

2. Satyam Computer Services Financial Scam

Satyam Scam x

The Satyam Computer Services scam, exposed in 2009, shocked the nation and exposed the dark underbelly of corporate governance in India. Ramalinga Raju, the founder of Satyam, manipulated the company’s financial statements to create a façade of growth and profitability.

The Satyam scam not only resulted in massive financial losses for investors but also eroded trust in the integrity of corporate India. The incident led to a wave of corporate governance reforms, highlighting the importance of transparency, accountability, and independent auditing in the corporate sector.

3. Sahara Group Financial Scam


The Sahara Group scam, which unfolded over several years, involved a massive illegal fundraising scheme. Sahara Group, led by Subrata Roy, raised funds through a network of chit-fund-like investment schemes, promising high returns to investors.

The scam came to light when the Securities and Exchange Board of India (SEBI) cracked down on the Sahara Group for violating fundraising regulations. The fallout from the Sahara Group scam resulted in legal battles, financial liabilities, and a loss of public trust in unregulated investment schemes.

This incident highlighted the need for investor awareness, stricter regulations, and enhanced oversight of investment schemes to protect unsuspecting investors.

4. Punjab National Bank (PNB) Scam

(PNB) Scam, largest financial scams in Indian history

The Punjab National Bank (PNB) scam, uncovered in 2018, sent shockwaves through the Indian banking industry. The scam involved the fraudulent issuance of Letters of Undertaking (LoUs) by PNB employees, enabling diamond merchants Nirav Modi and Mehul Choksi to obtain loans from overseas branches of Indian banks.

The PNB scam, with its staggering value of around $2 billion, revealed gaps in the banking system’s risk management and internal controls. It highlighted the importance of robust due diligence, risk assessment, and stringent internal audits to prevent such fraudulent activities.

5. Saradha Group Chit Fund Financial Scam


The Saradha Group chit-fund scam, originating in West Bengal, unfolded over several years and involved the collection of funds through unregulated chit-fund schemes. The Saradha Group, led by Sudipto Sen, lured investors with promises of high returns and exploited their trust.

The scam exposed the vulnerabilities in the unregulated chit fund sector and its potential to defraud unsuspecting investors. The fallout from the Saradha Group scam led to widespread protests, legal battles, and increased scrutiny of chit-fund schemes. It highlighted the need for tighter regulations and better investor protection measures in the unregulated financial sector.

The Takeaway

From the manipulation of the stock market in the Harshad Mehta scam to the corporate deception of the Satyam Computer Services scam, these biggest financial scams in India have underscored the vulnerabilities within the Indian financial system.

These incidents serve as a stark reminder of the importance of robust regulatory mechanisms, transparency, accountability, and investor awareness. They highlight the need for enhanced oversight, independent auditing, and stricter regulations to protect investors and maintain the integrity of the financial system.