Finanacial irregularities and frauds in lending corporate undertaking-A case study

Abstract

After 25 years of Liberalization and Globalization the Financial System in India has drastically increased. At the same time the Indian Financial System has witnessed exponential growth in financial irregularities and frauds. It adversely affects the GDP of the economy. According to ASSOCHAM Survey, loss in a year because of the fraud is 20 billion USD. In today's volatile economic environment and technologically driven sophisticated methods, help to commit frauds such as Money Laundering, Accounting Frauds, Investment frauds, Bankruptcy frauds etc. The study examines the King Fisher Airline Fraud. It also studies the role played by the CBI and RBI with regard to Frauds. Vijay Mallya, Owner and Chairman of the United Breweries Group and King Fisher Airlines, allegedly escaped from India to Britain on 2nd March 2016, owing Rs. 9.000 Crores to various seventeen Indian Banks. In spite of having a negative net worth and negative credit rating during the financial years 2012 and 2013, the IDBI bank gave Rs. 950 Crores loan to King Fisher Airlines. Mr. Vijay Mallya was arrested by the UK Metropolitan Police Extradition Unit on 18th April 2017, and released on bail. Lacks of transparency, Mismanagement, Poor Judgment of Government, Banks & Courts are the reasons for committing frauds. Fraud can be reduced by applying stringent internal controls, and an anti-bribery training and compliance audit, Whistle blower/ethics hotline, internal audit, data analytics and statutory audit are important measures. This case is under investigation and pending for judgment in Britain Court.