Over the past decade, India’s banking system has found itself in deep trouble. From rising Non-Performing Assets (NPAs) to massive loan scams and poor accountability, the damage has been both financial and emotional. While small borrowers get chased for minor dues, powerful corporations walk away with thousands of crores—often with little consequence.
In this blog, let’s break down what’s really going wrong, who’s responsible, and what you can do if you’re affected.
What is an NPA and Who is a Wilful Defaulter?
Let’s start with the basics. An NPA (Non-Performing Asset) is a loan where the borrower has stopped making repayments (either principal or interest) for over 90 days. The Reserve Bank of India (RBI) classifies NPAs into:
- Substandard assets
- Doubtful assets
- Loss assets
Now, not every NPA is fraudulent. Sometimes businesses fail for genuine reasons. But the real problem lies with wilful defaulters—people who can repay, but choose not to.
According to RBI, a wilful defaulter is someone who:
- Has the capacity to repay but avoids it intentionally
- Diverts the loan for unauthorized use
- Siphons off money to other companies or ventures
- Sells off the assets pledged as collateral
Major Bank Scams That Shook the Nation
Here are some of the biggest cases that highlight how deep the rot goes:
1. Nirav Modi–PNB Scam (₹13,000+ crore)
Using fake LoUs (Letters of Undertaking), Nirav Modi and Mehul Choksi exploited banking loopholes for years. It exposed flaws in internal audits and SWIFT system access at Punjab National Bank.
2. DHFL–Yes Bank Fraud (₹30,000+ crore)
In one of the country’s worst financial frauds, DHFL reportedly diverted public money with help from insiders. Arrests followed, but the damage had already been done.
3. ABG Shipyard Scam (₹22,000+ crore)
Massive loans were given to ABG Shipyard by a group of banks. The company defaulted and later it was found that funds had been diverted and assets stripped.
4. Videocon–ICICI Bank Case
Allegations of conflict of interest surfaced against ICICI’s then CEO Chanda Kochhar, showing how personal relationships and corporate favors can hurt banking integrity.
Why These Frauds Keep Happening: Legal Gaps & Weak Oversight
Even with stronger laws like the Insolvency and Bankruptcy Code (IBC) and bodies like NCLT and IBBI, the system is still failing to prevent fraud. Why?
- Lack of proper background checks before approving big loans
- Delayed action by regulators and enforcement agencies
- Weak corporate governance—many big firms simply ignore internal controls
- Easy escape routes for defaulters to move money abroad or delay litigation
The Real Impact: How It Affects You and Me
You might think these frauds don’t affect you directly—but they do:
- Banks recover losses by increasing charges, minimum balance penalties, and service fees
- Credit becomes harder to access for honest small businesses and individuals
- Public confidence in banks drops—and that’s dangerous in any economy
- Even with ₹5 lakh deposit insurance, people now fear losing their hard-earned savings
What Can Victims and Whistleblowers Do?
If you’ve been affected by loan mismanagement, or if you’re aware of a financial fraud, here’s how to take action:
1. File a Complaint with the Right Authorities
- RBI Ombudsman – for grievances against banks
- SEBI – if a listed company is involved
- SFIO – for major corporate frauds
2. Explore Legal Remedies
Depending on your situation, you can file:
- A civil suit for compensation
- A criminal complaint under fraud or cheating laws
- Cases with NCLT, Consumer Forums, or PMLA courts for financial misrepresentation
3. Get Expert Legal Help
At B S Makar Advocates and Solicitors, we support:
- Victims of bank fraud and loan scams
- Public interest litigations (PILs) on systemic banking failures
- Whistleblowers needing legal protection
- Class action suits for collective financial redress
Final Thoughts
India’s banking crisis is about more than bad loans. It’s about broken trust, unequal treatment, and a system that too often favors the powerful. Until wilful defaulters are truly held accountable—and the system becomes transparent and fair—the risk to India’s financial health remains very real.
📣 Have You Been a Victim of Financial Fraud or Banking Mismanagement?
You’re not alone—and you don’t have to fight alone either.
About the Author
B S Makar, Advocate
Founder – B S Makar Advocates and Solicitors
📍 Mohali, Punjab | 📞 +91-9878131111 | 🌐 www.makarlaws.com
We specialize in helping victims of banking fraud, financial misrepresentation, and NRI property disputes. Trusted across India and abroad for our honest advice, legal expertise, and results-driven approach.
