WCC & Regulatory Lapses in Loan Fraud: Statutory Architecture, Enforcement Frictions and Systemic Vulnerabilities in India’s Financial Sector

The conception of white-Collar crime

Although the nomenclature of “white-collar crime” was brought into the big picture in mid-20th-century criminological discourse, analytical engagement with economically privileged offending agents, which are now classified as “white-collar offenders”, predates its terminological codification within the genealogy of criminology.[1] At the turn of the century, Edward Alsworth Ross [hereinafter “Ross”] theorised the figure of the “criminaloid” or the quasi-criminal, depicting him as a market participant whose culpability was obfuscated by intermediaries.[2] Unlike the conventional offender, the criminaloid was not a direct practitioner of illegality but rather a consumer of its outcomes, with the machinery of commerce insulating him from the sordid mechanics of deviance.[3]

The determination of ‘who qualifies as a white-collar offender’ is contingent upon the definitional framework adopted for white-collar crime.[4] Within the Sutherlandian paradigm, however, the inquiry is largely redundant, as the focus is inherently on actors occupying dominant positions within corporate and political hierarchies or in simpler terms, the “elites of our society”.[5] These individuals, by virtue of their decision-making authority, exert direct influence over the allocation of financial resources and the stability of national economic systems.[6] Their significance lies in the concentration of economic and political capital they command, rather than in their socio-demographic attributes. Nonetheless, Sutherland and subsequent scholarship implicitly situate such offenders within a profile of privileged status, predominantly white, male, socially advantaged, psychologically unremarkable, and largely insulated from exposure to the coercive mechanisms of the criminal justice apparatus.[7]

Importance of Bank Credit in the Indian Economy

Whether discussing the scholarly inquiry into the nexus between credit provision and economic expansion, is longstanding, proponents argue that a well-functioning financial system, particularly commercial banks, promotes allocative efficiency by channelling savings to borrowers with positive net present value investment opportunities, thus catalysing capital formation and aggregate output.[8] 

By performing financial intermediation, stewarding public deposits, leveraging balance sheets and enabling endogenous money creation, banks operate as a principal channel of the monetary transmission mechanism and a fulcrum for macroeconomic policy.[9] Critics contend that real growth is determined primarily by real variables such as resource endowments, capacity utilization and productivity, and that credit growth is often an endogenous consequence of expanding economic activity.[10] Causality can therefore run from output expansion to elevated credit demand rather than unambiguously the reverse; notwithstanding that cyclical credit expansion, mediated by prudential supervision and statutory capital norms, can materially affect the tempo and composition of economic growth.[11]

Among early literature, Adam Smith highlighted the role of banks in driving economic growth and attached special significance to the role of capital in his Wealth of Nations.

Interrelating White-Collar Crime with Bank Loan Fraud

Particularly talking about Loan fraud and its interrelation with the quasi crime being in the picture, we must trace it from the key idea. Loan fraud persists not because laws are absent but because asymmetric enforcement and weak, untimely forensics create a two-tier system that rewards delay and enables impunity.

 

Introduction to regulatory gaps enabling loan fraud in India

Incidents of loan fraud in India consistently leverage regulatory arbitrage created by temporal lags in detection, asymmetrical reporting practices, and heterogeneous supervisory intensity across credit institutions.[12] The Reserve Bank of India has itself acknowledged that fraudulent conduct is frequently unearthed ex post facto, often years subsequent to its execution, with financial intermediaries occasionally furnishing delayed or incomplete disclosures of material frauds.[13]In several instances, revelations have first emerged in the public domain through media reportage rather than statutory filings, thereby affording borrowers an interim window to engage in diversion of proceeds, multi-layered transactions, and asset dissipation prior to the initiation of corrective regulatory or judicial measures. Such systemic inertia materially impairs the efficacy of early warning mechanisms, particularly in consortium lending and multiple-banking arrangements, perpetuating borrower opacity and information asymmetry.[14]Although recent regulatory amendments have introduced enhanced prudential controls and stricter compliance obligations, a substantial enforcement gap continues to persist. Recent regulatory amendments have introduced tighter prudential controls but also expose residual blind spots. The “2024 Fraud Risk Management framework” eliminates certain legacy certification and flash-reporting requirements, while FAQs restrict NBFCs and HFCs to reporting fraud only within their subsidiaries, affiliates, or joint ventures, thereby limiting oversight of group-wide risk migration. Although prompt referral to law enforcement is emphasised, the non-mandatory reporting of all offences under the BNSS 2023 generates legal friction at the regulatory–criminal enforcement interface.[15]

Compromise settlements and technical write-offs constitute a critical regulatory fault line if we talk about the prime regulatory gaps which enables loan frauds in India via Indian Banks.[16] While the RBI permits, under narrowly defined conditions, compromise settlements even in fraud or wilful default accounts without prejudicing penal consequences under the respective frameworks, operational practice often dilutes deterrence.[17] Weak governance, related-party exposure, and influence-driven[18] recovery strategies can convert settlements into a tool for moral hazard, implicitly signalling that strategic default remains negotiable after the fact.[19]

[Image Sources: Shutterstock]

kParliamentary and vigilance diagnostics consistently attribute loan fraud to structural infirmities in credit appraisal and governance. The Standing Committee on Finance (2018)[20] linked high NPAs, write-offs and stalled recoveries in PSBs to deficient appraisal, weak monitoring and fragile risk architecture, facilitating evergreening, collateral inflation, circular financing through LCs/BGs and diversion via related parties.[21] The Central Vigilance Commission’s review of the top 100 frauds evidences recurrent modus operandi and staff collusion,[22] exposing systemic lapses in diligence, asset verification and end-use surveillance.[23]

RBI’s operational-risk advisories and audit scholarship highlight persistent under-capacity in internal audit, forensic infrastructure and MIS integration.[24] Despite repeated supervisory calls for independent audit and inspection lines, forensic reviews remain largely ex post, costly and heterogeneously deployed, undermining preventive efficacy and deferring fraud recognition, which consequently postpones criminal referral, debarment and resolution haircuts.[25] Empirical evidence on wilful default further associates borrower misconduct with weak enforcement architecture and inadequate inter-institutional information flows, indicating that regulatory disincentives and credit-market signalling remain insufficient to preclude recidivist access to finance.[26][27]

Legal & Regulatory Framework

 

Banking Regulation Act & RBI supervisory reach

The Banking Regulation Act, 1949[28] supplies RBI with broad directive, inspection and corrective powers (“licensing, fit-and-proper, directions under s.35A”) that, in theory, establish an integrated prudential perimeter for deposit-taking intermediaries. RBI’s supervisory regime is a mixed model of off-site surveillance (returns, prudential ratios, MIS)[29], on-site inspections and enforcement actions; since the 2010s this has been augmented by consolidated supervision, IT-enabled surveillance and dedicated fraud-reporting master directions (most recently the 2024 Master Directions on Fraud Risk Management).[30] Those instruments create formal reporting chains from frontline credit operations up to boards and to RBI.[31]

From an economic-principal-agent lens, the governing failure is not statutory vacuum but temporal and informational misalignment. Banks and NBFCs face short-run incentives (market share, lending growth, fee income) that bias against early classification of problem exposures; boards and managers internalise those incentives, auditors under-report or delay adverse findings due to reputational/contractual ties; supervisors face information arrival lags and political economy pressures that create “regulatory forbearance”. The practical consequence is a window in which diversion, layering and asset dissipation can be executed before effective enforcement, turning prudential rules into ex-post remedies rather than ex-ante constraints.[32] Empirical disclosures on wilful defaulters and RBI supervisory notes show repeated patterns of late detection and concentrated losses in a handful of counterparties.[33]The Banking Regulation Act, 1949[34] codifies the RBI’s statutory supervisory architecture, inspection, licensing, on-site scrutiny, and enforcement directives.[35] Notwithstanding this broad legal mandate, enforcement efficacy is blunted by temporal and technological frictions:[36] 

1. Delayed or fragmentary onsite or the IT-enabled inspections create permissive conditions for structured misappropriations, asset overvaluation, and related-party siphoning.[37]

2. Sectoral data further underscores the operational shortfall: public sector banks, while complete in submission, consistently underperform private peers in data accuracy, timeliness and consistency, key parameters for robust supervisory calculus. [38]

Despite RBI’s Master Directions on fraud risk establishing baseline governance and mandatory reporting thresholds, supervisory commentaries and empirical audits chronicle uneven implementation across banks and NBFCs, manifesting in persistent oversight lacunae.[39]

RBI master directions and the reporting/early-warning gap:

RBI’s July 2024 consolidated Master Directions (RBI’s Direction) on Fraud Risk Management require regulated entities to strengthen board oversight, early-warning systems and prompt reporting to the regulator and law enforcement.[40] The RBI FAQs and regulator’s press releases however reveal specifics that narrow reporting (for instance, group-reporting rules for “NBFCs”)[41] and acknowledge that reporting delays persist; the very window in which funds can be diverted, layered and dissipated. Independent analyses and accounting firm’s notes highlight under-investment in forensic MIS and reactive forensic reviews, which blunt proactive detection.[42][43]

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI)

The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI)[44] establish a non-judicial enforcement regime enabling creditors to assume possession and effectuate sale of secured assets without recourse to lengthy civil litigation (noting collateral valuation and monitoring deficiencies in fraud cases).[45] The statutory efficiency, however, is contingent upon the existence of enforceable and liquid security interests and on the integrity of loan classification records. Fraudulent borrowers routinely undermine these predicates through over-valuation of collateral, multiple encumbrances, and intra-group asset transfers, thereby frustrating enforcement.[46][47]Where security is intangible, extra-territorial, or has been dissipated, the SARFAESI mechanism loses traction and creditors are compelled to invoke penal statutes such as the Indian Penal Code 1860, the Prevention of Money Laundering Act 2002,[48] or the Fugitive Economic Offenders Act 2018 to pursue recovery and deterrence.[49][50]

How fraud exploits SARFAESI’s assumptions

Fraud architectures strategically destabilise SARFAESI’s baseline predicates. Inflated or fictitious collateral valuations (through “book inflation” or “forged reports”) nullify the re-possession buffer.[51] Encumbrance layering via multiple prior charges or phantom liens erodes the net realisable value.[52] Asset dissipation and intra-group shuffling transfer value offshore or off-balance-sheet, undermining domestic possession and auction efficacy.[53] Collateral in intangible or specialised forms (intellectual property, receivables in foreign chains) resists rapid monetisation under the Act’s enforcement protocols.[54]These are less statutory lacunae than evidentiary and traceability failures, given SARFAESI’s reliance on clear title and realisable collateral.

Empirical literature underscores three recurrent frictions:

First, valuation latency: credible, independent valuation requires time and is contestable in borrower objections under s 17 DRT proceedings.[55] 

Second, auction inefficiencies: empirical studies of SARFAESI auctions reveal low bidder turnout, depressed recovery multiples, and opportunistic related-party bids.[56] 

Third, coordination failures with criminal processes: parallel CBI & ED investigations and asset-freezing orders often delay SARFAESI sales and chill market confidence, reducing auction yields.[57] 

The result is that the mechanism remains potent ex ante but brittle against premeditated fraud structures.

The literature converges on three reform prescriptions:

(a) strengthening valuation governance through mandatory use of registered independent valuers and digital collateral registries (via CERSAI),[58] 

(b) linking SARFAESI triggers with Suspicious Transaction Report (STR) and FIU-IND alerts to pre-empt asset dissipation,[59] and

(c) institutionalising fast-track forensic valuation units capable of producing court-resistant valuations within statutory windows.[60] 

These recommendations, echoed in doctrinal commentary and empirical papers, aim to restore SARFAESI’s efficacy against fraud-induced erosion.

PMLA (AML architecture / FIU-IND): Detection, reporting incentives and laundering chains that enable loan fraud:

The Prevention of Money Laundering Act 2002 (PMLA) together with the Prevention of Money-laundering (Maintenance of Records) Rules 2005 establish the Suspicious Transaction Report (STR) and Cash Transaction Report (CTR) architecture, vesting the Financial Intelligence Unit–India (FIU-IND) with powers of collection, analysis and dissemination.[61] The Enforcement Directorate (ED), operating under the Directorate of Revenue Intelligence framework, exercises attachment and confiscation authority over proceeds of crime, thereby translating financial intelligence into coercive asset-freezing remedies.[62] In design, the anti-money-laundering framework is intended to transform transactional red-flags emanating from regulated entities into prosecutable predicate investigations and asset-preservation strategies.

STR filing generates reputational, operational and commercial costs, including customer attrition, regulatory scrutiny, correspondent-bank churn and litigation exposure.[63] Accordingly, banks confront a strategic trade-off: escalate and risk supervisory heat versus suppress signals and retain business flows. Where supervisory incentives are diluted and compliance architectures are heterogeneous, under-reporting becomes rational. The FATF Mutual Evaluation Report (2024) explicitly diagnosed low STR density across certain financial subsectors and recommended intensification of risk-based supervision.[64] This informational deficit is precisely the permissive condition that enables diversion proceeds to be laundered through multi-tiered channels.

FIU-IND annual reports and Egmont Group case typologies document recurrent laundering patterns:

(i) rapid circular transfers through related entities;

(ii) trade-based layering and offshore invoicing conduits;

(iii) structured deposits and withdrawals routed via NBFCs and affiliates;

(iv) migration of diverted funds into ostensibly clean assets such as FCNR deposits and term instruments.[65]

Case narratives show that while STRs have occasionally catalysed successful enforcement linkages, equally often reporting pipelines have failed to interdict value-dissipation at scale.

The literature converges on three axes of reform. First, enhancing FIU-IND’s analytic stack through machine-learning driven anomaly detection and entity-resolution engines.[66]Second, institutionalising transactional inter-operability between FIU-IND, RBI supervisory departments and ED to enable real-time freezing of suspect flows.[67] Third, calibrating sanctions through administrative fines and reputational disclosures to deter chronic under-filing.[68]FATF’s 2024 evaluation, ICLG practice guidance and Indian academic commentary converge on these prescriptions, underscoring measurable metrics of STR quality and supervisory responsiveness as necessary conditions for credible deterrence.[69]

Companies Act, 2013: corporate governance, auditors, related-party channels and the audit-enforcement interface

The “Companies Act 2013” embeds a multilayered governance architecture. Directors owe fiduciary and statutory obligations under S. 166; related-party transactions (RPTs) require disclosure and approval under ss 184 and 188; auditors are bound under s 143 to report fraud to the audit committee and Registrar of Companies; fraud attracts criminal sanction under s 447.[70][71][72][73][74] Collectively, these provisions design company-level internal controls and external assurance mechanisms as the primary defence against fund diversion and mis-reporting.[75]

Loan frauds exploit corporate group complexity. Nominee and shell directors insulate beneficial owners; RPTs and intra-group financing siphon resources into unregulated affiliates or offshore vehicles; inflated receivables and creative accounting generate fictitious collateral and overstated cash flows that distort credit appraisals.[76] Empirical work documents how RPTs in India mask true economic exposure, while audit resignations, delayed qualifications, or passive audit committees enable these manipulations to persist.[77] Statutory remedies often activate only ex post, requiring forensic conversion of audit trails into prosecutable evidence, a process characterised by high latency and evidentiary complexity.[78]

Auditors operate under a mixed incentive structure comprising contractual dependence on management, reputational capital, and litigation risk. This produces conservative escalation behaviour: deferral of reporting until evidence is incontrovertible; professional capture arising from fee dependence; and judicially articulated high evidentiary burdens for criminal liability of individual partners.[79] These dynamics attenuate the deterrent force of the Companies Act, undermined further by institutional capture and slow prosecutorial pipelines. Academic and practitioner commentary has therefore argued for mandatory auditor rotation, joint-auditor regimes, and automatic forensic triggers on high-risk red flags.[80]

Literature recommends time-bound forensic escalations when RPT thresholds are breached; enhanced statutory accountability of independent directors with sanctions for wilful blindness; and tighter inter-agency coordination between ROC, SEBI (for listed companies) and criminal enforcement bodies to preserve assets pre-emptively.[81] Empirical studies conclude that such reforms would reduce fraud-classification latency and improve early detection metrics.

 

Fugitive Economic Offenders Act, 2018 : remedial role, limits and cross-border recovery economics

The Fugitive Economic Offenders Act 2018 (FEOA) establishes a quasi-civil confiscatory pathway targeted at individuals accused of scheduled offences involving amounts exceeding INR 100 crore.[82] Its operational design reduces dependence on extradition by permitting attachment and eventual confiscation of domestic assets once a judicial declaration of “fugitive economic offender” has been secured.[83] The Act thus complements the PMLA 2002 framework and the Enforcement Directorate’s investigative mandate by enabling swifter asset immobilisation without awaiting the outcome of a protracted criminal trial.[84]

Recovery efficacy under FEOA is subject to three structural frictions. First, the traceability constraint: proceeds must be locatable and demonstrably linked to the accused through financial forensics. Second, the cross-border enforcement deficit: a significant proportion of assets reside in secrecy jurisdictions or non-cooperative states with weak MLAT pipelines.[85] Third, the designation bottleneck: judicial confirmation remains necessary and is susceptible to dilatory litigation tactics by the accused across fora.[86] Empirical and doctrinal commentary indicates that FEOA functions primarily as an ex post recovery device, more symbolic than preventive, and often yields only incremental recovery where wealth is internationally fragmented.[87]

“By raising the expected cost of absconding, FEOA theoretically improves the ex-ante deterrence profile. Yet deterrence is conditional upon the probability of detection and the timeliness of asset-freezing. Where fraud detection is delayed or assets dissipate before designation, marginal deterrence is negligible.”[88]

Scholarly literature accordingly situates FEOA within a bundle of statutory instruments, including PMLA, SARFAESI and supervisory tightening, rather than as a self-sufficient preventive mechanism.[89]

Anatomy of Loan Frauds & Unregulated Lending.

 

Loan frauds in India are best understood as engineered breaches of the informational and institutional assumptions that underwrite credit decisions:

where banks and other lenders expect verifiable collateral, auditable cash-flows and transparent counterparty relationships, fraudsters manufacture opacity through legal fakery, circular finance and insider collusion. [90]

The most salient example in recent memory, the “PNB LoU episode”, demonstrates how low-friction trade instruments combined with breakdowns in SWIFT[91] and verification controls can convert contingent obligations into immediate, systemic exposures, showing that operational control failures, not merely statutory lacunae, are the proximate enablers of catastrophic loss.[92][93]

Fake Letters of Undertaking and forged guarantees operate as a modality of instantaneous obligation-creation: an LoU or back-to-back guarantee substitutes for a documented loan and, when issued outside prescribed checks, turns off-balance exposure into irrevocable bank liability. These instruments are vulnerable because they rely on trust in internal messaging systems and on reconciliations that can be suppressed by colluding staff; supervisory reviews and practitioner analyses indicate that procedural bypasses and weak second-line verification convert LoUs into durable channels of loss.[94] Equally pernicious is end-use diversion: sanctioned funds are nominally granted for a project but are routed through related entities, third-party vendors or offshore conduits, leaving the sanctioned asset underfunded while the borrower’s economic benefit is siphoned away.[95] Empirical studies of wilful default and RBI reporting patterns show concentration of such diversion in large, complex corporate groups where monitoring of end-use is inherently difficult.[96][97][98] 

Related-party lending and intra-group circularity provide the structural scaffolding for many fraud schemes. Sophisticated group architectures recycle funds through intercompany receivables, management fees and vendor invoices to fabricate liquidity while extracting economic value to sheltered affiliates; academic work on related-party transactions in India links such practices to reduced audit independence and to higher incidence of accounting manipulation. When combined with weak external assurance or timorous audit committees, these techniques render credit appraisals and covenant tests illusory.[99]Similarly, forgery of security documents and the exploitation of registry frictions, duplicated charge records, non-digitised title chains and delayed searches, permit the same parcel of collateral to be hypothecated multiple times or to be presented as clean when it is already encumbered, undermining the asset-backing premise that statutes like SARFAESI presuppose. Case reports from investigative journalism and policing records repeatedly document loans advanced on forged property papers and duplicated documentation.[100]

Financial-statement falsification, enabled by audit capture and internal control breakdowns, is the final piece in the composite fraud architecture. Inflated receivables, fabricated inventories and bogus purchase orders create an internally consistent story that satisfies credit MIS and stress-test filters; yet that story collapses once forensic scrutiny or end-use verification is effective. The economics of audit markets: fee dependence, relationship risks and high litigation thresholds, create incentives for delayed escalation, meaning that statutory audit obligations often produce signals only after substantial value has been dissipated.[101][102]

Parallel to these mechanisms is a shadow credit ecology that magnifies the reach and rapidity of fraud. NBFCs, fintech intermediaries and shadow lenders perform economically valuable distributional functions but occupy heterogenous regulatory perimeters; this heterogeneity creates regulatory arbitrage corridors whereby bank funding can be transformed into riskier onward lending outside traditional prudential constraints.[103] Studies of NBFC scale and policy discussion papers on a scale-based regulatory approach highlight how funding chains from banks to NBFCs, and onward to thinly regulated vehicles, create opacity in ultimate exposure and end-use.[104] Fintech platforms and third-party onboarding agents further compress time-to-disbursement, enabling layering that outpaces conventional AML and KYC controls; practitioner reports on digital-lending abuses document aggressive agent networks and rapid settlement chains that facilitate quick circulation of diverted proceeds.[105]

Cooperative banks and other mutuals add another vector of risk: fragmented supervision and political pressures produce pockets of lax governance where liquidity irregularities and insider collusion flourish. Dual or state-level regulation of cooperatives and observed supervisory under-resourcing make such institutions attractive nodes for parking diverted funds or for orchestrating conduit flows that evade mainstream detection.[106] At the retail end, informal moneylenders and cash-based conduits supply off-record settlement capacity that can be used to service obligations or to extract small but vital amounts of value out of the formal system, a feature frequently observed in field surveys of urban and rural informal credit markets.[107]

These operational and structural realities are enabled by a set of regulatory seams. First, weak internal forensic capacity and governance mean that many frauds mature within the credit lifecycle before any board or supervisory alarm is raised; RBI’s 2024 fraud-risk master directions explicitly locate this as a governance failure demanding board-level remediation and independent forensic capability.[108] Second, inadequate whistle-blower protection and career incentives for front-line staff and auditors blunt the incentives to escalate anomalies; although the Companies Act and audit standards impose reporting duties, enforcement frictions and reputational costs often deter early disclosure, as practitioner guidance repeatedly emphasises.[109] Third, data fragmentation and delayed reporting create the critical time window in which funds can be diverted and expatriated: segmented credit registries, asynchronous Fraud Monitoring Returns, and non-interoperable channels between RBI, FIU-IND and investigating agencies produce pipeline losses that transform recoverable mischief into irrecoverable dissipation. FIU annual reports and supervisory notifications document high STR volumes but variable downstream actionability, pointing to an implementation bottleneck rather than a mere legal vacuum.[110]

 

Case Study and Chronologies.

Loan fraud in India is best read as a failure of incentives, information and enforcement operating together. At the micro level the fraud playbook is simple: fabricate or conceal the economic reality that underpins credit (false invoices, forged property papers, fake Letters of Undertaking), then use organizational capture or procedural gaps to prevent timely detection; at the macro level those micro-acts exploit structural disjunctions between regulated institutions (banks) and the shadow credit ecosystem (NBFCs, fintech’s, cooperatives) that create regulatory arbitrage and traceability gaps. This combinational pathology turns what should be an isolated contractual breach into a systemic event with depositor and taxpayer consequences.[111][112]

A narrow empirical snapshot makes the point starkly.

1. In the dataset summarised earlier, reported fraud-incidents across FY2018-19 → FY2023-24 total 81,619 cases

2. (sum computed from year values: 6,799 + 8,707 + 7,359 + 9,103 + 13,576 + 36,075 = 81,619), giving an arithmetic mean of 13,603.166666… incidents per year.[113]

3. The aggregate reported value across those financial year’s sums to ₹495,519 crore (71,543 + 185,000 + 138,000 + 60,414 + 26,632 + 13,930 = 495,519), a mean annual figure of ₹82,586.5 crore. [114]

4. These simple arithmetic aggregates reveal two simultaneous dynamics: a very large value concentration in a small number of large frauds (spikes in FY2019-20 and FY2020-21) and [115]

5. more recently, a sharp rise in the frequency of (mostly smaller) incidents (FY2023-24) consistent with proliferation of digital channels and better low-value detection.[116] 

The forensic chronologies of emblematic cases show how technique and seam combine. The PNB LoU episode is an operational-control collapse: off-balance trade commitments (LoUs) were instrumented through internal messaging bypasses and branch-level collusion, converting contingent liabilities into realised losses;[117] the failure was not the absence of law but the breakdown of verification and reconciliation processes plus delayed internal reporting.[118] 

The Vijay Mallya or the Kingfisher saga foregrounds related-party flows and cross-jurisdictional traceability:[119] aggressive intra-group transfers, mis-stated end-uses and offshore ownership made coordinated recovery and criminal enforcement slow and incomplete.[120] PMC Bank’s collapse illustrates governance capture within a cooperative structure, concentrated exposure to a single promoter group, manipulated account classification and supervisory opacity, producing depositor harm long before statutory remedies were practically effective.[121][122] In the DHFL and IL&FS episodes the common threads are opaque group funding, shell-company layering, and rapid maturity-mismatch: these are classic shadow-credit failure modes where market discipline and consolidated supervision both failed to bite.[123]

Translated into regulatory theory: fraud exploits information asymmetry (borrowers conceal adverse signals), agency slack (management/auditor collusion or capture), and perimeter arbitrage (regulated → lightly regulated → opaque conduits). Remedies therefore must be multi-vector. On the detection side, near-real-time, interoperable data pipelines (credit-registry harmonisation, CERSAI linkages, automated STR analytics at FIU-IND) reduce the window for dissipation and materially increase detection probability, thereby shifting the ex-ante incentive calculus of potential malefactors.[124] On the governance side, institutionalising independent forensic units, stronger whistle-blower legal shields, and mandated audit-rotation/forensic triggers tighten the internal agency problem and raise the reputational and criminal expected cost of participation.[125]

Behind every aggregate number are small businesses denied credit, depositors locked out of lifesavings, and employees whose jobs disappear when a finance house collapses. Operational fixes, clearer whistle-blower pathways, protected escalation to regulators, and faster provisional asset-freezing, are not only technocratic; they are redistributional instruments that restore credibility and reduce social cost. Strengthening forensic capacity and data interoperability therefore has both efficiency and equity rationales.[126]

 

Policy Recommendations and the Model Forensic Protocol

1. The first imperative is governance reform: “Salus populi suprema lex”  the safety of the public is the supreme law. Lenders should institutionalise a board-level Special Committee for Fraud Monitoring (SCBMF) vested with de jure powers to commission independent forensics, suspend implicated officers and mandate immediate remedial steps; this is not mere formality but a structural recalibration of agency costs that converts board oversight from rhetorical duty into operable deterrence. The RBI’s 2024 Master Directions presage this shift, and the clause should be transposed into binding prudential rules with prescribed quorum, reporting periodicity and automatic triggers for SCBMF jurisdiction.

2. “A ring-fenced Forensic Audit Unit (FAU) is res ipsa loquitur of independent inquiry.” Every bank and NBFC above a calibrated scale threshold must maintain an FAU that reports functionally to the SCBMF and administratively to the audit committee. The FAU must be segregated from normal credit oversight, resourced with certified forensic auditors, rotated periodically, and shielded from managerial interference; auditor independence alone is inadequate where capture is plausible. Statutory standards for FAU qualifications, procurement, and rotational tenure will deter collusive equilibria inside organisational hierarchies.

3. To shift incentives ex ante, the state must operationalise “near-real-time” transparency: implement an interoperable credit-registry / CERSAI-plus platform that enforces contemporaneous end-use confirmations, centralised UBO resolution and automated anomaly flags. Put succinctly, “caveat creditor” must be reversed by infrastructure: machine-detectable circular flows and related-party concentrations drastically reduce the expected gains from orchestrating diversion. Technical collaboration between RBI, FIU-IND and CERSAI should be mandated, not discretionary.

4. On the money-laundering axis, adopt a prophylactic “freeze-first” posture: where an STR or preliminary FAU assessment evidence probable diversion, regulators should have the power to issue a provisional asset-hold order pending FIU analysis, a binding interlocutory conservatory measure to arrest dissipation. This is consonant with PMLA’s spirit but must be operationalised with short, statutory timelines and an emergency interlocutory mechanism to prevent the proverbial mousehole through which proceeds escape. The FATF mutual-evaluation insights counsel shorter FIU to ED pipelines.

5. “SARFAESI works where valour veritas is present.” Its non-judicial muscle must be strengthened by valuation and title reforms. Introduce a statutory register of independent valuers, mandate pre-sale valuation certifications, create fast-track valuation benches and tighten auction transparency norms to reduce collusive under-bidding. Crucially, auctions should be conditioned on forensic attestation of title when STRs indicate potential diversion, thereby preventing successor-buyer capture and preserving creditor recovery values.

6. Company-law and audit reforms should follow the maxim “dura lex, Sed lex”: harden s.143 implementation by requiring time-bound escalation to statutory authorities on enumerated red flags, mandating auditor rotation above scale thresholds, and imposing administrative sanctions for repeated non-escalation. A statutory forensic-trigger list, thresholds for related-party transactions, concentration of exposures, recurring qualified opinions, must compel immediate FAU referral and rapid supervisory intervention.

7. Consolidated supervision is essential because “regulatory perimeters are porous”: adopt scale-based consolidated supervision for NBFC groups and material financial conglomerates to close arbitrage corridors between banks, NBFCs, cooperatives and FinTech’s. The IL&FS and DHFL episodes demonstrate that opacity in group funding chains yields systemic contagion; a uniform prudential marker for bank-to-nonbank exposures and mandatory group-level reporting will compress opacity and raise market discipline.

8. Protect whistleblowers as a public good , “Salus populi in micro-law”: codify a regulator-facing protected escalation channel (anonymous hotline to RBI/FIU) with statutory immunities (no constructive dismissals) and calibrated financial incentives for leads that produce convictions or recoveries. Such a scheme treats credible internal intelligence as quasi-public information whose social return justifies public reward and legal shelter.

9. Enhance cross-border recovery and FEOA operationalisation: “actus reus of cooperation” requires faster MLATs, reciprocal freezing MOUs and a time-bound FEOA fast-track designation protocol for principals whose flight risk is manifest. FEOA’s ex post confiscatory reach is valuable but its deterrent effect is conditional on speed; provisional freezes and emergency cooperation clauses with principal offshore jurisdictions will increase expected recoverability.

10. Calibrate deterrence with administrative instruments: supplement long-dated criminal remedies with swift administrative fines, disgorgement orders and civil debarments from market access. The principle is simple, severity without swiftness is hollow; the legal regime must offer rapid, credible administrative sanctions so that expected marginal costs deter opportunistic defaults before the judiciary’s slow wheel turns.

Conclusion and Limitations

This paper demonstrates that large-scale loan fraud in India is less a product of doctrinal vacuum than of implementation failure, an interactional pathology of information asymmetry, agency capture and regulatory perimeter gaps that converts statutory tools (Banking Regulation, SARFAESI, PMLA, Companies Act, FEOA) from preventive instruments into ex-post remedies. Strengthening forensic independence, near-real-time interoperable registries, expedited STR to freeze pathways and consolidated supervision for non-bank credit intermediation will materially compress the fraud window, raise the expected cost of malfeasance and restore market discipline.

Limitations: The analysis relies exclusively on published, online materials, supervisory reports and high-profile case chronologies, which limits empirical granularity: confidential supervisory datasets, internal bank MIS logs and prosecution files were not available for inspection and would enrich causal inference. The statistical snapshot aggregates RBI-reported figures that reflect changing reporting practices and inclusion thresholds over time, so observed trends may partly reflect improved detection rather than true incidence changes.

Finally, the policy prescriptions emphasise institutional and technical reforms but do not model political-economy constraints to implementation.

Author: Dhwani Narsinhbhai Amin, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

 References

Books:

1.     S Subramanian, Corporate Frauds in India: Theory and Practice (Springer 2018).

2.     RK Mishra, Banking Frauds in India: Causes, Consequences and Cures (ICFAI University Press 2019).

Journal Articles:

1.     P Sengupta and R Bhattacharya, ‘Bank Frauds in India: A Critical Analysis of Regulatory Gaps’ (2019) 54(2) Economic and Political Weekly 32.

2.     S Ghosh and T Ghosh, ‘Regulatory Arbitrage and the Rise of Shadow Banking in India’ (2020) 55(4) Economic and Political Weekly 40.

3.     P Srivastava, ‘The LoU Scam and Structural Fault Lines in Indian Banking’ (2018) 23(3) Journal of Financial Crime 218.

4.     M Puri and R Kohli, ‘SARFAESI and the Enforcement Conundrum in India’ (2019) 46(2) Company Lawyer 75.

5.     A Choudhury, ‘Fugitive Economic Offenders Act: Preventive or Cosmetic?’ (2019) 61(1) Journal of the Indian Law Institute 113.

6.     K Dutta and S Dutta, ‘Regulatory Framework and Loan Fraud in India: Gaps and Challenges’ (2019) available at https://www.primedatabase.com/article/2019/Article-Kaushik%20Dutta%20%26%20Shuchi%20Dutta.pdf.

7.     ResearchGate papers on SARFAESI enforcement, valuation governance, and auction inefficiencies (various authors, 2018–2024).

8.     JETIR Journal articles on asset securitisation enforcement and fraud mechanics in Indian banking law.

9.     IJFMR research notes on credit risk, collateral enforcement, and fraud loopholes.

10.  taxinitiative.southcentre.int, ‘Illicit Financial Flows and Asset Recovery Mechanisms’ (Policy Brief, 2022).

11.  INSPIRA Journal articles on cross-border economic offences and India’s asset recovery regime.

12.  Indian Journal of Law and Human Behaviour (IJLHM) – analysis of Fugitive Economic Offenders Act effectiveness.

13.  Indian Journal of Law and Legal Research (IJLLR) – scholarship on SARFAESI shortfalls and regulatory lapses.

14.  Scribd practitioner papers on Fugitive Economic Offenders Act and comparative forfeiture frameworks.

Reports and Policy Papers:

1.     Reserve Bank of India (RBI), Report on Trend and Progress of Banking in India 2022-23 (RBI 2023).

2.     RBI, Financial Stability Report (various years, esp. 2020–2023).

3.     Standing Committee on Finance, Twenty-First Report on Banking Sector: Loan Frauds and Rising NPAs (Lok Sabha Secretariat 2019).

4.     World Bank, Global Financial Development Report 2019/2020: Bank Regulation and Supervision (World Bank 2020).

5.     Financial Intelligence Unit (FIU-IND) and RBI circulars on suspicious transaction reporting (STR) and collateral traceability.

6.     Centre for Advanced Financial Research and Learning (CAFRAL) discussion papers on fraud risk management.

7.     CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest of India) reports on collateral registry effectiveness.

Cases:

1.     Punjab National Bank v Nirav Modi (CBI charge-sheet; LoU fraud case, 2018).

2.     Satyam Computer Services Ltd v Union of India (2009) (Corporate governance fraud case, leading to Companies Act reform).

3.     Vijay Mallya v Enforcement Directorate (2020) (Fugitive Economic Offenders Act proceedings).

4.     Rotomac Global v Union of India (2018) (loan diversion case).

5.     State Bank of India v Kingfisher Airlines Ltd (2012) (loan default litigation before DRT).

6.     Nirav Modi Extradition Case [2021]

7.     ICICI Bank v Official Liquidator of APS Star Industries Ltd (2010) 10 SCC 1.

8.     Transcore v Union of India (2008) 1 SCC 125.

9.     Mardia Chemicals Ltd v Union of India (2004) 4 SCC 311.

Statutes and Regulations:

1.     Banking Regulation Act 1949.

2.     Reserve Bank of India Act 1934.

3.     Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002.

4.     Prevention of Money Laundering Act 2002.

5.     Companies Act 2013.

6.     Fugitive Economic Offenders Act 2018.

Media & Secondary Sources (used for statistical inputs):

1.     ‘Bank Frauds Rise 117% in FY23, Amount Involved Falls 57%: RBI’ The Hindu Business Line (30 May 2023).

2.     ‘Bank Frauds Jump to 36,075 Cases in FY24: RBI Report’ The Economic Times (30 May 2024).

3.     Reuters, ‘India’s RBI Says Lenders Must Hear Loan Defaulters before Declaring Accounts Fraud’ (15 July 2024).

[1] Michael L Benson, Shanna R Van Slyke and Francis T Cullen, ‘Core Themes in the Study of White Collar Crimes’ in Shanna R Van Slyke, Michael L Benson and Francis T Cullen (eds), The Oxford Handbook of White-Collar Crime (OUP 2016) 2.

[2] Ibid 2.

[3] Ibid 2-3.

[4] Ibid.

[5] Ibid.

[6] Ibid 4-5.

[7] Ibid 6.

[8] Charan Singh, Subhash Pemmaraju and Rohan Das, ‘Economic Growth and Banking Credit in India’ (IIM Bangalore Research Paper No 531, December 8, 2016) https://ssrn.com/abstract=2882398 accessed 1 September 2025.

[9] Ibid.

[10] Ibid.

[11] Ibid.

[12] Reserve Bank of India, ‘Frauds—Classification and Reporting’ (supervisory communication noting delayed detection/reporting) https://www.rbi.org.in/commonman/English/scripts/Notification.aspx?Id=916 accessed 25 September 2025.

[13] Ibid.

[14] Ibid.

[15] Reserve Bank of India, ‘FAQs on Master Directions on Fraud Risk Management in REs, 2024’ (web page, 22 April 2025) https://www.rbi.org.in/commonman/English/scripts/FAQs.aspx?Id=3763 accessed 26 September 2025.

[16] Reserve Bank of India, ‘Master Directions on Fraud Risk Management in Regulated Entities (REs), 2024—FAQs’ (22 April 2025) https://www.rbi.org.in/commonman/Upload/English/FAQs/PDFs/RISK22042025.pdf accessed 30 September 2025.

[17] Reserve Bank of India, ‘Framework for Compromise Settlements and Technical Write-offs—FAQs’ (20 June 2023) https://www.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=3459 accessed 29 September 2025.

[18] Ibid.

[19] Ibid.

[20] Standing Committee on Finance, Banking Sector in India—Issues, Challenges and the Way Forward (PRS Legislative Research summary, 28 September 2018) https://prsindia.org/policy/report-summaries/banking-sector-in-india-issues-challenges-and-the-way-forward accessed 29 September 2025.

[21] Ibid.

[22] Ibid.

[23] Central Vigilance Commission, Analysis of Top 100 Bank Frauds (15 October 2018) https://cvc.gov.in/files/area-studies-pdf/AR%2000001.pdf accessed 30 September 2025.

[24] Reserve Bank of India, ‘Internal Audit/Inspection—Strengthening for Fraud Detection’ (supervisory guidance) https://www.rbi.org.in/commonman/english/scripts/Notification.aspx?Id=603 accessed 30 September 2025.

[25] Ibid.

[26] M Jayadev and S Kumar, ‘Wilful defaulters of Indian banks: A first-cut analysis’ (2020) 43(1–2) IIMB Management Review 84 https://www.sciencedirect.com/science/article/pii/S0970389617302136 accessed 29 September 2025.

[27] Ibid.

[28] PwC India, ‘RBI’s Master Direction on Fraud Risk Management - Practitioner note’ (2024) https://www.pwc.in/assets/pdfs/ accessed 2 Sep 2025.

[29] Ibid.

[30] Jayadev M and Padma N, ‘Wilful Defaulters of Indian Banks: A First-Cut Analysis’ (IIMB Management Review, June 2020, Vol 32 No 2).

[31] Ibid.

[32] Ibid.

[33] Kaushik Dutta (Director, Thought Arbitrage Research Institute) and Shuchi Dutta (Fourth Year Law Student), ‘Fraud in Related Party Transactions: Can We Spot the Rot?’ (Prime Database, 2019) [pdf, 3 pp] https://www.primedatabase.com/article/2019/Article-Kaushik%20Dutta%20%26%20Shuchi%20Dutta.pdf accessed 1 September 2025.

[34] The Banking Regulation Act, 1949.

[35] Supra note 16.

[36] Banking Regulation Act 1949, ch IV. See also LawArticle, ‘Reserve Bank of India’s Powers under the Banking Regulation Act 1949’ (LawArticle, 2024) https://lawarticle.in/reserve-bank-of-india-power-banking-regulation-act-1949/ accessed 1 September 2024.

[37] International Monetary Fund, India: Financial Sector Assessment (IMF Country Report No 13/267, 2013) https://www.elibrary.imf.org/view/journals/002/2013/267/article-A001-en.xml accessed 30 August 2025.

[38] Supra note 29.

[39] Kriti Sharma, ‘Regulatory Framework of Bank Audit and Inspection: A Critical Study’ (Lawctopus Academike, 2023) https://www.lawctopus.com/academike/regulatory-framework-bank-audit-inspection-critical-study/ accessed 29 August 2025.

[40] Supra note 29.

[41] Supra note 15.

[42] Deloitte, ‘Banking Fraud Risk Management: Perspectives 2024’ (Deloitte Insights, 2024) https://www2.deloitte.com accessed 30 September 2025.

[43] KPMG, ‘Forensic Fraud Risk and MIS Integration in Financial Institutions’ (KPMG Report, 2023) https://home.kpmg accessed 30 September 2025.

[44] Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, s 13.

[45] Reserve Bank of India, ‘Report on Trend and Progress of Banking in India 2023–24’ (RBI 2024) https://www.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=3459 accessed 29 September 2025.

[46] Ibid.

[47] The SARFAESI Act, 2002 (India) https://www.indiacode.nic.in/bitstream/123456789/2006/1/A2002-54.pdf accessed 2 Sep 2025.

[48] Ibid.

[49] Ministry of Finance, ‘Report of the Standing Committee on Finance on Stressed Asset Resolution’ (Lok Sabha Secretariat 2018) https://loksabha.nic.in accessed 30 September 2025.

[50] Ibid.

[51] Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002, s 13.

[52] Ranjan R, ‘SARFAESI Enforcement and Collateral Governance in Indian Banking’ (2022) International Journal of Law and Legal Research https://ijllr.com accessed 30 September 2025.

[53] S Mishra, ‘Loan Fraud Mechanisms and Legal Enforcement Challenges’ (2023) Journal of Emerging Technologies and Innovative Research (JETIR) https://www.jetir.org accessed 29 September 2025.

[54] P Sinha, ‘Collateral Traceability and Asset Dissipation Risks in Indian Credit Markets’ (2021) ResearchGate https://www.researchgate.net accessed 29 September 2025.

[55] A Sharma, ‘Judicial Review of SARFAESI Valuations: DRT and DRAT Interventions’ (2020) IJFMR https://www.ijfmr.com accessed 30 September 2025.

[56] N Gupta, ‘Auction Market Microstructure under SARFAESI: Empirical Evidence’ (2022) ResearchGate https://www.researchgate.net accessed 29 September 2025.

[57] Standing Committee on Finance, Report on Stressed Asset Resolution (Lok Sabha Secretariat 2018) https://loksabha.nic.in accessed 30 September 2025.

[58] Reserve Bank of India, Master Directions on Valuation by Registered Valuers (RBI 2022) https://rbi.org.in accessed 29 September 2025.

[59] Financial Intelligence Unit – India, Annual Report 2022–23 (FIU-IND 2023) https://fiuindia.gov.in accessed 30 September 2025.

[60] K Dutta, ‘Forensic Valuation and SARFAESI Enforcement: A Practitioner’s Perspective’ (2019) IJLLR https://ijllr.com accessed 30 September 2025.

[61] Prevention of Money Laundering Act 2002, ss 12–17; Prevention of Money-laundering (Maintenance of Records) Rules 2005.

[62] Supra note 59.

[63] V Kumar, ‘Compliance Costs and STR Economics in Indian Banking’ (2022) Academia.edu https://www.academia.edu accessed 29 September 2025.

[64] Financial Action Task Force, Mutual Evaluation Report: India (FATF 2024) https://www.fatf-gafi.org accessed 30 September 2025.

[65] Egmont Group, Case Studies in Trade-Based Money Laundering (Egmont Secretariat 2023) https://egmontgroup.org accessed 29 September 2025.

[66] S Basu, ‘AI and Financial Intelligence: Machine-Learning for STR Analytics’ (2023) ResearchGate https://www.researchgate.net accessed 30 September 2025.

[67] International Comparative Legal Guides, Money Laundering 2024: India Chapter (ICLG 2024) https://iclg.comaccessed 29 September 2025.

[68] Reserve Bank of India, Enforcement Action on AML Failures (Press Release, 12 July 2023) https://rbi.org.in accessed 30 September 2025.

[69] Supra note 66.

[70] Companies Act 2013, s 143.

[71] Ibid, s 166.

[72] Ibid, s 184.

[73] Ibid, s 188.

[74] Ibid, s 447.

[75] Institute of Company Secretaries of India, ‘Guidance Note on Reporting of Fraud by Auditors’ (ICSI 2020) https://www.icsi.eduaccessed 29 September 2025

[76] Vinod Kothari Consultants, ‘Corporate Governance and RPT Risks in India’ (2023) https://vinodkothari.com accessed 29 September 2025.

[77] Supra note 33.

[78] Indian Institute of Management Bangalore, ‘Audit Committees and Loan Fraud Risk: Evidence from Indian Firms’ (IIMB Working Paper 2022) https://www.iimb.ac.in accessed 30 September 2025.

[79] ‘HC Quashes Criminal Proceedings against Statutory Auditors in Loan Fraud Case’ The Times of India (Mumbai, 17 July 2023).

[80] Surbhi Kapur, ‘Audit Failures and Corporate Governance in India’ (2021) 56(2) SAGE Vikalpa Journal 245.

[81] S Singh, ‘Corporate Governance Failures and Fraud Risk Mitigation in India’ (2023) ResearchGate https://www.researchgate.net accessed 30 September 2025.

[82] Fugitive Economic Offenders Act 2018, s 4.

[83] Ministry of Finance, Statement of Objects and Reasons, Fugitive Economic Offenders Bill 2018 (Lok Sabha Secretariat 2018).

[84] Indian Journal of Law and Human Behaviour, ‘Civil Forfeiture and the Fugitive Economic Offenders Act’ (2020) 6 (1) IJLHM 45.

[85] South Centre Tax Initiative, Cross-Border Asset Recovery Challenges in Developing Countries (Policy Brief No 91, 2021) https://taxinitiative.southcentre.int accessed 29 September 2025

[86] ResearchGate, A Singh, ‘The Fugitive Economic Offenders Act and International Cooperation in Asset Recovery’ (2022) https://www.researchgate.net accessed 29 September 2025.

[87] INSPIRA Journal of Modern Management & Entrepreneurship, ‘Case Study: Vijay Mallya and the Enforcement of FEOA’ (2021) 11(2) 33.

[88] S Chatterjee, ‘Economic Offences and the Limits of Deterrence: A Critique of FEOA’ (2023) Scribd Working Paper https://www.scribd.com accessed 30 September 2025.

[89] ResearchGate, P Mehta, ‘Bundled Regulatory Responses to Loan Fraud in India’ (2023) https://www.researchgate.net accessed 30 September 2025.

[90] R Khandelwal, ‘A Critical Analysis of the Punjab National Bank Scam and its Aftermath’ (SSRN, 2018) https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID3274568_code1903182.pdf?abstractid=3274568accessed 6 September 2025.

[91] ‘THE PUNJAB NATIONAL BANK (PNB) SCAM CASE — CASE STUDY’ (ResearchGate) https://www.researchgate.net/publication/354447361_THE_PUNJAB_NATIONAL_BANK_PNB_SCAM_CASE_STUDY accessed 6 September 2025.

[92] Supra note 16.

[93] KPMG, ‘First Notes — RBI releases revised fraud risk management directions’ (July 2024) https://assets.kpmg.com/content/dam/kpmg/in/pdf/2024/07/firstnotes-rbi-releases-revised-fraud-risk-management-directions-for-regulated-entities.pdf accessed 6 September 2025.

[94] Supra note 90

[95] Ibid.

[96] Supra note 26.

[97] Supra note 16.

[98] Financial Intelligence Unit — India, ‘Annual Report 2021–22’ (PDF) https://fiuindia.gov.in/pdfs/downloads/AnnualReport2021_22.pdf accessed 6 September 2025.

[99] A Jagtiani and C Lemieux, ‘Related-Party Transactions and Audit Fees: Indian Evidence’ (American Journal of Professional Taxation) https://publications.aaahq.org/ajpt/article/44/3/155/12862/Related-Party-Transactions-and-Audit-Fees-Indian accessed 6 September 2025.

[100] ‘13 booked for cheating bank of ₹4.8cr with forged documents’, Times of India (1 July 2024) https://timesofindia.indiatimes.com/city/gurgaon/13-booked-for-cheating-bank-of-48cr-with-forged-documents/articleshow/111388894.cms accessed 6 September 2025.

[101] ICAI/KPMG, ‘Mandatory reporting of fraud by an auditor — Guidance note’ (2023) https://assets.kpmg.com/content/dam/kpmg/in/pdf/2023/08/firstnotes-mandatory-reporting-of-fraud-by-an-auditor.pdf accessed 6 September 2025.

[102] Supra note 26.

[103] V V Acharya, ‘The growth of a shadow banking system in emerging markets’ (2013) https://pages.stern.nyu.edu/~sternfin/vacharya/public_html/pdfs/NBFC_Paper.pdf accessed 6 September 2025.

[104] Reserve Bank of India, ‘Discussion Paper on Revised Regulatory Framework for NBFCs — A Scale Based Approach’ (22 Jan 2021) https://rbidocs.rbi.org.in/rdocs/content/pdfs/DP22022021.pdf accessed 6 September 2025.

[105] ‘Digital Lending in India: Harassment, Settlements, and the Law’ (SSRN) https://papers.ssrn.com/sol3/Delivery.cfm/5092390.pdf?abstractid=5092390accessed 6 September 2025.

[106] Supra note 98.

[107] NIPFP, ‘Urban Informal Credit Markets in India’ (2014) https://www.nipfp.org.in/media/medialibrary/2014/10/URBAN_INFORMAL_CREDIT_MARKETS_IN_INDIA.pdf accessed 6 September 2025.

[108] Supra note 16.

[109] World Law Group, ‘2024 Whistleblower Guide: India’ (15 Nov 2024) https://www.theworldlawgroup.com/membership/news/news-2024-wlg-whistleblower-guide-indiaaccessed 6 September 2025.

[110] Supra note 98.

[111] Supra note 90.

[112] Supra note 26.

[113] Business Standard, ‘Amount in bank fraud up 159% to Rs 1.85 trn in 2019-20’ (25 Aug 2020) https://www.business-standard.com/article/economy-policy/amount-in-bank-fraud-up-159-to-rs-1-85-trn-in-2019-20-rbi-120082500972_1.html accessed 6 September 2025.

[114] Ibid.

[115] Ibid.

[116] The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) (India) https://www.indiacode.nic.in/bitstream/123456789/2006/1/A2002-54.pdf accessed 6 September 2025.

[117] Supra note 90.

[118] Supra note 16.

[119] Supra note 103.

[120] The Guardian, ‘Tycoon Vijay Mallya can be extradited to India — UK judge rules’ (10 Dec 2018)https://www.theguardian.com/world/2018/dec/10/tycoon-vijay-mallya-can-be-extradited-to-india-uk-judge-rules accessed 6 September 2025.

[121] SAGE Journal / analyses on PMC Bank restrictions and supervision (RBI action Sept 2019)https://journals.sagepub.com/doi/10.1177/25166042241274843 accessed 6 September 2025.

[122] Supra note 26.

[123] Business Standard, ‘DHFL scam decoded: Fake borrowers, shell companies, and billions lost’ (16 May 2024) https://www.business-standard.com/finance/personal-finance/dhfl-scam-decoded-fake-borrowers-shell-companies-and-billions-lost-124051600923_1.html accessed 6 September 2025.

[124] Supra note 98.

[125] Supra note 101.

[126] Reserve Bank of India, ‘Discussion Paper on Revised Regulatory Framework for NBFCs — A Scale Based Approach’ (22 Jan 2021) https://rbidocs.rbi.org.in/rdocs/content/pdfs/DP22022021.pdf accessed 6 September 2025.