Banking Khabar/ The banking sector is generally regarded as a safe, reliable, and organized financial mechanism. Citizens trust that their earnings, savings, and assets will remain secure in banks. However, history shows that major scandals have occurred in this sector, causing not only individual losses but also shaking national and international economies.
Over the past few decades, banking scandals worldwide have defrauded millions of customers, caused losses worth billions of dollars, pushed governments into fiscal crises, and undermined public trust. Below are some of the most notable cases:
1. Collapse of Lehman Brothers
Founded in 1850, Lehman Brothers was the world’s fourth-largest investment bank. It collapsed during the 2007–08 subprime mortgage crisis after granting risky loans and securitizing them. In September 2008, it declared bankruptcy with losses exceeding \$600 billion, triggering a global financial crisis.
2. Harshad Mehta Scam
Broker Harshad Mehta manipulated the stock market using fake bank receipts and transactions, creating artificial demand and inflating prices. When exposed, the market crashed, wiping out the wealth of thousands of investors and questioning India’s regulatory framework.
3. BCCI Scandal
The Bank of Credit and Commerce International, operating in over 70 countries, was found guilty of money laundering, terrorist financing, and fraud worth around \$20 billion. It was eventually shut down, leaving millions of customers affected.
4. Wells Fargo Fake Accounts
Employees, under sales pressure, opened around 2 million unauthorized accounts. This damaged customer trust and forced the CEO to resign, with the bank paying billions in fines.
5. Toshiba–Olympus Scandal
Olympus concealed losses for decades by falsifying accounts with the help of banks. This financial fraud deeply shook investor confidence in Japan.
6. Swiss Bank Secret Accounts
Swiss banks, known for secrecy, were exposed in 2015 (“SwissLeaks”) for aiding tax evasion and money laundering through HSBC’s Swiss branch.
7. LIBOR Manipulation
Major banks including Barclays, Deutsche Bank, and UBS manipulated the London Interbank Offered Rate for profit. This affected global loans and mortgages, leading to multibillion-dollar fines.
8. Cyprus Banking Crisis
The Bank of Cyprus and Laiki Bank collapsed due to the Greek debt crisis. Depositors faced losses, and the EU had to provide a bailout.
9. Yes Bank Scandal
Yes Bank collapsed due to reckless lending, corruption, and weak oversight. The Reserve Bank of India intervened, sparking panic among depositors.
10. Digital Banking & Crypto Frauds
Recent scandals include the 2022 collapse of FTX, a crypto exchange run by Sam Bankman-Fried, which misused billions of dollars, impacting investors globally.
These incidents reveal how lack of transparency and weak regulation can lead to massive crises. Banking depends on trust; when profit motives outweigh ethics and regulators fail, scandals erupt. Such events not only destabilize economies but also erode public faith. As a result, nations worldwide are increasingly focusing on stronger regulation, transparency, and governance.
