Top 5 Financial Scams In India

Don't get duped by these top 5 financial scams in India! Protect yourself from costly tricks and stay informed with our essential guide!

23 Feb,2023 11:03 IST 2136
Top 5 Financial Scams In India

Like in the case of most other developing economies, India too has been increasingly subjected to several financial scams and frauds, which are getting more and more sophisticated with each passing day.

As the country’s financial markets develop, get digitized and begin to penetrate a larger and wider section of the Indian society, fraudsters and scamsters too have been trying to up their game, in a bid to catch people off guard and trick them into parting ways with their hard-earned money.

While a financial fraud or scam can take any shape or form, typically, five major types of such scams are perpetrated by scamsters. These are:

1. Ponzi Schemes:

Ponzi schemes are fraudulent investment schemes in which returns are paid to investors using the capital of new investors, rather than from profits earned through legitimate investments. The scheme continues until the fraudster can no longer attract new investors, and then the scheme collapses.

2. Multi-Level Marketing (MLM) Scams:

MLMs, also known as pyramid schemes, involve recruiting others to join the scheme with the promise of high returns. However, these returns are often generated by the payments of new recruits, rather than through legitimate sales of products or services.

3. Bank Loan Frauds:

Bank loan frauds involve individuals or companies applying for loans with false or inflated information or using fraudulent documents. They may also fail to repay the loan or divert the funds to personal accounts.

4. Phishing Scams:

Phishing scams involve fraudsters using emails, SMS messages or phone calls to trick people into revealing sensitive financial information such as passwords, bank account details or credit card numbers.

5. Stock Market Scams:

Stock market scams involve manipulating the market by spreading false rumors or insider information, artificially inflating the price of a stock, and then selling it at a profit.

Among these, bank loan frauds have been on the rise in the recent past and can be perpetrated either by someone posing as a lender or even as a borrower, who is out to borrow with the intention of never returning the money.

As a borrower, one should be extremely careful about who one is borrowing from. Every borrower should thoroughly check the antecedents of the lender as well as their physical presence and the depth of their branch network in the city or town where one is borrowing the money.

An unscrupulous lender would typically try and cheat customers in one of the following ways:

1. By Charging Exorbitant High Rates Of Interest:

If the rate of interest being charged by the lender is much higher than that prevailing in the market, a borrower should be very cautious, as such a lender may be trying to pull off a fraud.

2. By Charging Processing Fees Before The Loan Is Disbursed:

If a lender seeks to charge a processing fee even before the application process is completed and the loan is actually disbursed into the borrower’s account, then this is a definitive red flag. Most well-established lenders typically charge a nominal fee at the time of disbursal and deduct it as a one-time charge from the loan amount.

3. By Promising A Loan Even When The Borrower Does Not Have The Requisite Paperwork:

If a potential lender promises a loan despite the borrower not having the complete paperwork in place or having a poor credit history that should otherwise disqualify him or her for the credit, then that is another red flag that the borrower should be very careful about. Most good lenders are very particular about the paperwork and credit history of the borrower before taking a call on whether the latter should be lent the money or not.


A lot of unscrupulous fraudsters and cheaters are out to rob people off their hard-earned money, all the time. It would, therefore, do you a world of good, if you were to approach a reputable lender like IIFL Finance for borrowing money.

Moreover, approaching a dependable lender very nearly eliminates the risk of fraud and ensures that the borrower can use the money productively and with the utmost peace of mind.

IIFL Finance not only offers some of the best interest rates in the market but also makes sure that the entire process, from application to disbursement and then from repayment to final closure of the loan, is smooth and hassle-free.

Disclaimer: The information contained in this post is for general information purposes only. IIFL Finance Limited (including its associates and affiliates) ("the Company") assumes no liability or responsibility for any errors or omissions in the contents of this post and under no circumstances shall the Company be liable for any damage, loss, injury or disappointment etc. suffered by any reader. All information in this post is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results etc. obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. Given the changing nature of laws, rules and regulations, there may be delays, omissions or inaccuracies in the information contained in this post. The information on this post is provided with the understanding that the Company is not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers. This post may contain views and opinions which are those of the authors and do not necessarily reflect the official policy or position of any other agency or organization. This post may also contain links to external websites that are not provided or maintained by or in any way affiliated with the Company and the Company does not guarantee the accuracy, relevance, timeliness, or completeness of any information on these external websites. Any/ all (Gold/ Personal/ Business) loan product specifications and information that maybe stated in this post are subject to change from time to time, readers are advised to reach out to the Company for current specifications of the said (Gold/ Personal/ Business) loan.

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