The Indian economy has been affected by scams year after year since the great stock exchange scam in 1994. The nature of such scams has implications in the areas of financial reporting, audit procedures,corporate governance,legislation, economics and ethical conduct. One of the recent additions to this list is the Great Indian Bank Robbery Series published by The Indian Express throughout the month of December 2002. It is worth acknowledging that scams are not solely an Indian phenomenon, especially in the wake of the recent Enron and WorldCom debacles in the US; nevertheless, they are a drain on the nation's resources and leave an ever-lasting impact on the affected stakeholders. Drawing lessons from such debacles, the economies worldwide are moving toward strengthening their financial systems in order to prevent the recurrence of such events. The Sarbanes-Oxley Act has set the trend in this direction; various professional bodies and institutes around the world are debating on the adoption of International Financial Reporting Standards (IFRS) in order to ensure stringent and uniform reporting standards1.

The story was the first among the series of six published by The Indian Express2. The Group heads the list of defaulters with a massive Rs. 1450 cr of debt. Its stock prices slumped from Rs. 120 in May 1995 to Rs. 2.50 in November 2002. The report further points out that the Group has successfully averted banks and financial institutions from seizing assets by resorting to lengthy legal battles over a five-year period, despite being found guilty by the Board for Industrial and Financial Reconstruction of misappropriation of funds and providing unreliable financial statements3.

Lloyds Group is another example of mismanagement of funds partly fueled by the need to expand and diversify from core business of steel and metals to financial services, real estate and pharmaceuticals manufacturing. The Group is accused of financing these ambitious ventures through unauthorized intergroup transfer of funds: The end result being a whopping Rs. 2,166 cr worth loan against an asset base of Rs. 280 cr 4.

Regulation, India, Corporate, corporate malfeasance, transfer of funds, financial services, real estate and pharmaceuticals, mismanagement of funds, Industrial and Financial Reconstruction, misappropriation of funds, The Indian Express2, stock prices, legal battles, High-Level Committee, International Financial Reporting Standards (IFRS), Indian economy, WorldCom.