The Evolution of White Collar Crimes in India: From Scam 1992 to Modern-Day Frauds

I. Introduction

White collar crimes, often labelled as corporate crimes, have undergone a striking transformation in India over the past few decades. A turning point was reached in 1992 when the infamous Harshad Mehta securities scam1 revealed flaws in the financial system and undermined investor trust. White collar criminals now exploit digital technologies, creating complex schemes that are harder to detect and prosecute. At their core, these crimes revolve around financial gain achieved through deceit, concealment, or breach of trust. 

This evolution calls for a fresh look at regulatory frameworks, enforcement mechanisms, and public awareness. As the face of white collar crime changes, so must the strategies to combat it, blending technology, law, and vigilance to protect the integrity of India’s financial and corporate landscape.

II. Harshad Mehta’s Scam: A Financial Turning Point

The 1992 securities scam, orchestrated by Harshad Mehta, is often seen as the turning point for white collar crime in India. Using loopholes in the banking system, Mehta manipulated stock prices, leading to a market crash and a financial scandal involving over ₹4,000 crores.2 This scam exposed vulnerabilities in India’s banking, resulting in significant reforms, including the establishment of the Securities and Exchange Board of India (SEBI) as a robust market regulator.

III. The Post-Liberalization Era and the Surge of Corporate Frauds 

The economic liberalization of 1991 opened India's markets to rapid industrial growth and an influx of foreign investment.3 This expansion led to a rise in corporate fraud, ranging from accounting manipulations to insider trading. 

The 2009 Satyam scandal is a prime example. Founder Ramalinga Raju admitted inflating the company’s accounts by over ₹7,000 crores, deceiving investors and stakeholders alike. This scandal triggered a revaluation of auditing standards, leading to stricter norms under the Companies Act, 2013 and the establishment of the National Financial Reporting Authority (NFRA) to ensure better oversight of accounting practices.4 

IV. Enforcement of PMLA under the ED: A Decisive Step Against Money Laundering5 

The Prevention of Money Laundering Act (PMLA), 2002, is India’s key legislation intented to combat money laundering and confiscate assets derived from criminal activities. Although enacted in 2002, it came into effect on July 1, 2005, and its enforcement was entrusted to the Enforcement Directorate (ED), a specialized agency under the Ministry of Finance. 

The ED is the nodal agency enforcing the PMLA. Under Section 5, the ED can provisionally attach suspect properties, whereas Section 8 allows for post-adjudication confiscation.  

India’s approach strengthens compliance with the Financial Action Task Force (FATF) guidelines, particularly its 40 Recommendations. The ED’s enforcement record plays a vital role in upholding India’s commitments as a FATF member. 

The ED works closely with the Financial Intelligence Unit–India (FIU-IND), which analyses financial data from banks and other institutions.  

V. Legislative Framework Governing White Collar Crime     Prevention6

India’s response to white collar crime is anchored in a robust legislative framework designed to deter, detect, and punish financial and corporate offenses. The key laws include:

• Prevention of Corruption Act, 1988–This act targets corruption among public officials, aiming to uphold integrity in public administration. 

• Companies Act 2013: This act establishes stringent norms for corporate governance, accountability and transparency within companies.  

  
  

• SEBI Act, 1992–Regulates the securities market to prevent manipulation, insider trading, and other malpractice.  

  
  

• Information Technology Act, 2000 (Amended in 2008)-This act addresses cybercrimes, adapting legal provisions to the digital age.  

  
  

• Bharatiya Nyaya Sanhita, 2023– Introduces a modernised legal approach by replacing relevant provisions of the BNS related to fraud and economic offenses. 

VI. Modern-Day Frauds and Digital Crimes 

In the digital era, new forms of white collar crime, including cryptocurrency scams, online Ponzi schemes, and identity theft have emerged as significant threats.7 The absence of comprehensive regulatory guidelines for digital assets has placed investors and users vulnerable to exploitation.  

The rise of FinTech has introduced fresh challenges as digital lending fraud and data breaches become increasingly common. Regulating bodies like the Reserve Bank of India (RBI) and SEBI are constantly modifying their regulations in order to keep up with rapid advancements in technology.  

VII. Conclusion: The Path ahead 

The evolution of white collar crime in India reflects the shifting landscape of the economy and rapid technological progress. Although legislative frameworks have strengthened considerably, the increasing sophistication of these crimes demands continual adaptation and vigilance. 

The key to mitigating white collar crime are enhanced cyber laws, stronger corporate governance, and widespread financial literacy. As India moves toward a more digital and interconnected economy, robust regulatory mechanisms and strict enforcement become imperative. 

Success in this battle hinges on collaborative efforts between regulatory authorities and technology innovators. Together, these forces can harness cutting-edge tools and coordinated strategies to effectively combat the growing menace of white collar crime.