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Modus Operandi of Financial Fraudsters: Part III

Updated: Jul 8, 2022

In the last blog post, we saw how financial fraudsters work in a dynamic environment and steal data. They improved their hacking and sabotage skills and mastered these skills as professionals. As we already know about phishing links, scams using online sales platforms, phishing calls, ATM card theft, and scams due to unknown/unverified mobile application downloads, SIM Cloning/ SIM Swap, frauds using Remote Access/ Screen Sharing App, scam through QR scan, frauds by compromising credentials on results through search engines, juice jacking, impersonating through social media, online job fraud, and lottery fraud among others.

It must however be noted that fraudsters are now also affecting the Non-Banking Financial Companies (NBFCs). Let us first understand what a Non-Banking Financial Company or an NBFC is. The Reserve Bank of India (RBI) defines an NBFC as, a non-bank financial company (NBFC) is a company registered under the Companies Act of 1956, which engages in loan and advance business, and purchases stocks/stocks/bonds/bonds/securities or other securities similar to transferable securities issued by the government or local authorities. Nature, lease, lease purchase, insurance business, cheque business, but does not include any main business for agricultural activities, industrial activities, purchase or sale of any property (except securities), or provision of services and sales/purchase/construction. Real estate. As a non-banking institution of the company, its main business is to receive deposits under any plan or arrangement at one time or in instalments through capital contribution or any other means. It is also a non-bank financial company (Residual nonbank company).

The layman must question and understand the difference between a bank and an NBFC. Among many some of the key differences can be summarised as follows:

  1. NBFC is not part of the payment and settlement system and cannot write checks on its own;

  2. Unlike banks, the deposit insurance facilities of deposit insurance and credit guarantee companies do not apply to NBFC depositors;

  3. NBFC cannot accept demand deposits.

Financial fraud can thus be concluded in NBFCs too. Let us understand some of the ways pursued by scammers and how we can protect ourselves:

1. Fake Advertisements for Extending Loan by Fraudsters

Modus Operandi

  1. Scammers publish false personal loan discount advertisements with attractively low-interest rates or simple payment methods or without any security requirements and require customers to contact them.

  2. To gain credibility and trust from easily fooled customers, these email IDs will be similar email IDs of well-known/real NBFC senior officials.

  3. When a customer makes a loan to a scammer, the scammer first collects various early fees, such as handling fee, GST, toll, advance EMI, unreserved expenses, etc., and ran away without issuing a loan.

  4. The scammers also created fake website links, which appeared in search engines, allowing people to search for information about loans.


To keep the customers and their assets safe the Reserve Bank of India (RBI) Ombudsman, Mumbai, in its booklet on modus operandi of financial fraudsters issued by the office of suggests that a user should be aware that an NBFC / Banker will never ask for prepayment before processing the loan application. Banks / NBFC charges a handling fee, which is deducted from the loan amount. No payment or security voucher is allowed for online quotations such as low-interest loans without verification of data from the true source.

2. SMS / Email / Instant Messaging / Call Scam

Modus Operandi

  1. Scammers spread fake news about the availability of attractive loans on IM / SMS / Social Media and use any NBFC logo known as a profile picture on your shared mobile phone number to increase credibility. The scammers even shared their fake Aadhaar / Pan cards and NBFC ID cards.

  2. After the scammer sends said group SMS / SMS / email to the loan applicant, randomly dials the phone, shares a false sanction letter, copy of the fake check, etc., and requests several rates. Once the victim has paid these fees, the scammer will run away with the money, leaving the victim with a slim chance of being recovered for


To keep the customers and their assets safe the Reserve Bank of India (RBI) Ombudsman, Mumbai, in its booklet on modus operandi of financial fraudsters issued by the office of suggests that a conscious user must never click on links sent via SMS/email or reply to promotional SMS/email. A user is advised not to open emails or reply to any emails from unknown sources that contain suspicious attachments or phishing links. Never create a loan offer that people offer yourself over the phone/email. Do not make any payments for such offers or share any personal/financial vouchers for such offers without verify their authenticity through other sources.

3. OTP based Fraud

Modus Operandi

  1. The victim received a text/instant message from the scammer posing as NBFC, offering loans, or increasing the credit limit, and was asked to contact the scammer's mobile phone number.

  2. When victims make a call, the scammer asks them to fill out some forms containing financial details (even when online), and prompts / persuades them to share the

OTP or PIN details, resulting in a waste of money.


To keep the customers and their assets safe the Reserve Bank of India (RBI) Ombudsman, Mumbai, in its booklet on modus operandi of financial fraudsters issued by the office of suggests that aware users must never share OTP numbers / PINs / personal data, etc. with anybody in any way and always check SMS / Email regularly to make sure that is not generating OTP without user’s knowledge.

4. Fake Loan websites / App Frauds

Modus Operandi

  1. Many unscrupulous loan applications that provide instant loans and short-term loans. These applications will mislead borrowers and may also charge much higher interest rates.

  2. To attract customers who are easily deceived, scammers promoted "limited time offers". This requires applicants to make an urgent decision and it also uses threat software strategies.


To keep the customers safe and their assets also safe the booklet on modus operandi of financial fraudsters issued by the office of Reserve Bank of India (RBI) Ombudsman, Mumbai, suggests that the following things should always be kept in mind:

  1. A real loan provider will never provide funds without document verification.

  2. Is the lender registered with the government / authorised agency?

  3. Verify that the loan applications supported by these NBFCs are authentic.

  4. Check if the lender provides the actual address or contact information for; otherwise, it may be difficult to communicate with them in the future.

  5. Is the lender more interested in knowing the personal information than in checking the credit score?

  6. Remember that no known bank / NBFC will request payment until processes the loan application.

5. Money Circulation/Ponzi/Multi-Level Marketing (MLM) Schemes Fraud

Modus Operandi

  1. The MLM/Chain Marketing/Pyramid Plan promises to easily or quickly get US when registering/adding members.

  2. The plan not only guarantees high returns, but also promises to pay the first instalment of to win the trust of credulous people and attract more investors through word-of-mouth advertising.

  3. The plan encourages more and more people to join the chain/group, for which commissions are paid to subscribers instead of product sales commissions.

  4. Due to this model, the plan became unsustainable after the number of people joining the plan began to decrease for a period of time. After, the scammer closed the case, and disappeared with the money invested by the people.


To keep the customers safe and their assets also safe the booklet on modus operandi of financial fraudsters issued by the office of Reserve Bank of India (RBI) Ombudsman, Mumbai, suggests these things should be checked out of the list before investing in a MLM/ Ponzi scheme:

  1. Always keep in mind that any payment / commission / bonus / percentage of profit for goods / services actually sold without is suspicious and may lead to fraud.

  2. Profitability is directly proportional to risk. As the common saying goes, the higher the risk, the higher the return. So if any plan continues to provide unusually high returns (such as 4050% per year), this is the first sign of potential fraud, proceed with caution.

  3. Accepting money under the coin circulation / multilevel marketing / pyramid structure is an identifiable crime under the Prize and Coin Circulation Prohibition Act of 1978. The public who comes across such an offer must present immediately a complaint to the state police.

  4. The public should not be seduced by the promise of high returns offered by entities that execute a pyramid-shaped marketing / chain marketing / multilevel program.

6. Fraudulent Loans with Forged Documents

Modus Operandi

  1. Counterfeit document fraud refers to a fraud in which forged documents and any form of service provided by financial institutions are used by individuals or units.

  2. This type of fraud occurred when KYC related documents were shared with the entity without verifying the authenticity of the NBFC employees / NBFC email ID.

  3. By stealing personal information from the victim (such as identity card, bank account data, etc.), and using this information or credentials to obtain benefits from financial institutions, fraudulent loans are also sanctioned for identity theft.


As precautionary measures to be observed by the Reserve Bank of India (RBI) Ombudsman, Mumbai as given in a booklet on modus operandi of financial fraudsters. These things should be checked out of the list:

  1. Said files should only be shared with the authorised person of the entity or the authorised email ID of the entity.

  2. Clients should be vigilant when borrowing from any entity, and provides KYC and other personal documents including NACH form after loan payment.

  3. In addition, after the loan is not approved and the loan is closed, the client should always ask an entity to withdraw the documents provided by the client to an entity

In the next blog post, we will learn about the general precautions that can be taken for financial transactions.


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