Investment, banking frauds cost Mumbai Rs9,838 crore in 2017 | mumbai news | Hindustan Times
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Investment, banking frauds cost Mumbai Rs9,838 crore in 2017

Among the various frauds, investment fraud comprised over 70 percent of the financial cheating cases in the city.

mumbai Updated: Feb 05, 2018 09:55 IST
Vijay Kumar Yadav
Investment fraud and housing fraud witnessed an increase in numbers.
Investment fraud and housing fraud witnessed an increase in numbers.(For representation)

Though the overall number of economic offences, popularly known as white collar crimes, dipped marginally in 2017, the quantum of properties involved in these financial crimes increased twofold and it jumped from Rs4,273 crore in 2016 to a whopping Rs9,838 crore in 2017.

Among the various financial frauds, investment fraud comprised over 70 percent of the financial cheating cases in Mumbai.

According to the statistics procured from Mumbai police, in 2017 the Economic Offences Wing (EOW) of the city police registered 109 cases as compared to 119 in 2016. Investment fraud and housing fraud witnessed an increase in numbers. “Five big cases of investment fraud were registered in 2017 and the case registered in the last quarter of 2017, the PanCard Clubs (PCL) was the biggest case of all time as it was worth over Rs7,000 crore,” said a senior EOW official.

The EOW has booked PCL and its six directors under sections of the Maharashtra Protection of Interest of Depositors (MPID) Act . PCL had floated various schemes for hotel stays. Enrolment to PCL required a fee and members were offered incentives to enrol other members. The members were offered holiday packages. On not getting any of the promised benefits an investor complained to the Securities and Exchange Board of India (Sebi). An inquiry by Sebi found that PCL ran a collective investment scheme (CIS) for which Sebi’s approval was required, but the directors never secured any such permission.

Other financial crimes decreased in comparison to 2016. While banking fraud cases dipped from 12 to 7 cases, general cheating dropped 38 to 33 cases and shares fraud from 12 to 5 cases in the year 2017. “Fresh regulations from RBI ensuring more transparency in banks’ functioning could be one of the reasons why banking fraud observed a decrease. While the digitisation of the share trading system also cut down malpractice and as a result fewer share-related frauds were reported,” an EOW officer said.

Former director general of police Praveen Dixit white collar crimes will come down in coming years as people are slowly becoming aware of such crimes and laws dealing with them. “The RBI also played an important role in bringing in newer measures to ensure checks and curb flaws in the system,” Dixit said.

Joint commissioner of police (EOW) Ashutosh Dumbre said, “There is a sense of awareness among people. But still we feel there is a lot to do in the future. When victims approach the police they come with lots of hopes and we put in efforts to fulfil their expectations.”

Real deal: Demonetisation, cash crunch led to more housing frauds

Mumbai: The city has witnessed an increase in number of housing frauds in 2017 as people opted to report cases against builders who duped them of their life savings in the name of building their dream homes.

According to the Mumbai police statistics, 50 cases of housing frauds were registered in 2017 as compared to 32 cases in 2016. Maximum of these 50 cases are registered under the Maharashtra Ownership Flat Act (MOFA) and involved transactions of around Rs1,085 crore collectively.

Officials from the economic offences wing (EOW) attributed the uptrend to the cash crunch post demonetization and to booking builders under MOFA on not delivering flats to buyers in time.

“There was a phase post demonetization, when the market observed a serious cash crunch. And the phase adversely impacted small and middle level builders and developers. They failed to complete housing projects and deliver them to buyers on time, as their traditional system of using black money for the work collapsed,” said an EOW officer, requesting anonymity.

Another EOW officer said many builders found themselves on the wrong side of the law as they followed the practice of misusing the home buyer’s money. “A builder takes money from home buyers and then puts that money in other projects he has. So, if one project gets stuck owing to some problems or clearance, the other projects get affected too. We have seen cases wherein builders have invested house buyer’s money in other non-housing projects and films,” the officer said.

Former director general of police, Praveen Dixit, said, “Earlier few cases would come up to the FIR level as builders would use their lobbies to influence the enforcers. But, the practice was cut down by the MOFA, which was there in place, but was not being used. During my tenure, I had given instructions to all unit heads in the state to register cases against builders under the MOFA.”

There is also a need for spreading awareness among people about their legal rights when they go to buy homes, he said.

A senior EOW official said that the cases of housing frauds are likely to drastically go down in the coming years because of the effective and transparent mechanism of the Real Estate Regulatory Authority (RERA). “The new mechanism leaves almost no scope for builders to cheat home buyers,” he said.