(202) 887-9363


Smith Brandon International frequently works for our clients in India. So we keep a close eye on the country to make sure we're always up to speed on what's happening there, and how it might effect our clients. Recently, India’s banking fraud problem has become so severe, some economic experts warn that it may hamper the country’s economic growth and development.

On April 27, it was announced that India’s Central Bureau of Investigation has booked 15 officials of IDBI Bank for involvement in an INR 6 billion (approx. US $90 million) fraud scheme. This is hardly the first fraud scheme uncovered, nor is it the largest. In February 2018, it was revealed that famed jeweler Nirav Modi and his uncle Mehul Choksi had defrauded the Punjab National Bank of approximately INR 130 billion (approx. US $1.9 billion); this was the largest fraud case in India’s history. Modi and Choksi fled India In January before the fraud scheme was revealed; Modi is believed to currently be in the United States.

These fraud cases are just two of many plaguing the banking sector. There were a total of 12,553 reported fraud cases in 2017, which cost the banking sector more than INR 180 billion (approx. US $2.7 billion). On top of that, the number of banking fraud cases have more than tripled in the last five years.

All of these fraud cases, along with cash shortages in some parts of the country, and massive numbers of bad loans to businesses and individuals, have soured the outlook for India’s growing economy. Goldman Sachs Group economists have reduced their growth projections for the 2018 fiscal year from 8 to 7.6 percent. While this amount may not seem large, it is worth noting that this is the expected growth of an entire country of over 1.3 billion people being reduced by the banking sector’s problems with fraud and other issues alone.

Not all banking experts share this pessimistic outlook. Ashish Chauhan, the CEO of Bombay Stock Exchange, says that the overall loss from these fraud cases is much too small to make a large impact on the country’s banking sector, and that talk of India entering a financial crisis is little more than “fearmongering.” However, there is little confidence in the effectiveness of the country’s efforts against corporate and banking fraud.  Even Chauhan admits as much, saying that Nirav Modi’s scam would not have taken place if proper reforms had been carried out beforehand.

India’s fraud problems, while a serious threat, are not isolated. Fraud can and does happen in every country on Earth. Engaging in foreign business carries risks that can harm your company’s finances and reputation. Smith Brandon International, Inc offers due diligence services all over the world to help you and your company spot and avoid fraud schemes.

What Others Are Saying

“Excellent report as always. We truly found it extremely helpful.”

DirectorEuropean Hotel Group

“As always, perfect. The client on the project in Taiwan was most pleased.”

DirectorInvestigative Firm

“ definitely helped [our division] and the whole company improve ... so [we] can make better informed decisions regarding our strategy.”

Strategy DirectorMajor Infrastructure Firm

“The reporting you just furnished us has helped us avoid a major mistake in looking at the potential new partner ... we are very pleased.”

VP for ComplianceInternational Construction Company

“Many thanks for your reporting and willingness to talk with us about what it means. You are correct, we do have an issue and we will take corrective action immediately.”

Corporate CounselInternational Pharmaceutical Company
Prev Next