SFIO cracks down on corporate frauds: 72 cases referred in last 5 yrs, says FM Sitharaman

The Central government has, in the last five years, referred 72 cases to the Serious Fraud Investigation Office (SFIO) for investigation, Lok Sabha was informed.

A further 69 complaints were filed, out of which 43 included complaints under Section 447 of the Companies Act, 2013 (which provides for imprisonment), Finance & Corporate Affairs Minister Nirmala Sitharaman said in a written reply to a Lok Sabha question.

In this five-year period (2019-2020 to 2023-2024), fines were imposed in 114 cases, 20 cases were compounded, and in 9 cases, fines and imprisonment were (till the rising of the courts) ordered, she added.

The Ministry of Corporate Affairs (MCA) takes action against frauds as defined under the Companies Act, 2013. Investigations in matters of serious frauds are assigned to the Serious Fraud Investigation Office (SFIO) under Section 212 of the Companies Act, 2013 on the basis of the report of the Registrar or Inspector, upon receiving intimation of a special resolution passed by the company, in public interest, or on the request of any Department of the Central or State government. These cases may include companies under investigation for financial irregularities exceeding ₹1,000 crore, as the exact quantum of financial irregularities is uncertain at the time the investigation is ordered.

What is SFIO?

The SFIO is India’s premier agency for investigating and prosecuting corporate frauds of significant public interest. It operates under the MCA and derives its powers from the Companies Act, 2013. As an investigating authority, the SFIO conducts thorough probes into corporate frauds, especially those involving complex financial structures, multiple stakeholders, and significant economic impact. Cases are assigned to the Central government, often based on findings from regulatory bodies like SEBI and RBI, or investigative agencies like the CBI.

SFIO employs experts in forensic auditing, law, and finance to analyse fraudulent activities. The agency has the power to summon individuals, inspect financial records, and seize documents during investigations.

The SFIO also collaborates with law enforcement agencies, financial regulators, and the judiciary to ensure comprehensive fraud detection and prosecution. If fraud is established, the SFIO can recommend prosecution under various sections of the Companies Act, 2013, including Section 447, which prescribes stringent penalties, including imprisonment.

The SFIO has investigated major corporate frauds, including the Satyam scam, IL&FS case, and DHFL fraud, reinforcing its role in maintaining corporate integrity.

By enhancing transparency, accountability, and deterrence, the SFIO plays a crucial role in safeguarding India’s corporate ecosystem against financial misconduct, economy watchers said.