India’s Central Vigilance Commission (CVC) has submitted a detailed report on the top 100 frauds in the banking system to the country’s central bank and the government.

The Reserve Bank of India (RBI) and the Economic Offences Wing of the ministry of corporate affairs now have to decide what to do about the report findings.

Diverting funds

The report found that companies used loopholes in bank lending processes and employed over-invoicing and fake bill discounting to divert bank finance from their core business.

It also noted the country’s biggest (US$2 billion) fraud allegedly perpetrated by celebrity jeweller Nirav Modi and others, including officials at Punjab National Bank, was in the gems and jewellery sector.

Suspect sectors

The commission said that three companies in that sector, including Modi’s company, adopted a similar fraudulent business model using letters of credit or cash credit obtained from banks.

In the manufacturing sector CVC studied frauds perpetrated by companies in the pharmacy, textiles and ferrous metal sectors.

Across sectors, the commission cited over-invoicing issues, fake bill discounting and the diversion of funds as its major concerns.

Categories: Trade Based Financial crimes News