Scribd Logo
Upload

Welcome to Scribd!

  • 33 views

    A Study of Frauds in Banking Industry: Research

    Uploaded by

    Yurih Khei Jham Aluminum
    This document summarizes a research study on frauds in the Indian banking industry. It analyzes secondary data on banking fraud cases from the last 5 years. The key findings are: - Private sector banks reported the highest number of fraud cases, while nationalized banks reported the highest total amounts involved in fraud cases. - The most common type of fraud cases reported were related to providing fake documents. - Delays in legal procedures for reporting frauds and loopholes in banking systems have contributed to higher instances of fraud. - It is recommended that banks improve internal fraud monitoring, risk management policies, and adherence to regulations to better prevent and identify frauds at early stages.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    A Study of Frauds in Banking Industry: Research

    Uploaded by

    Yurih Khei Jham Aluminum
    33 views3 pages
    This document summarizes a research study on frauds in the Indian banking industry. It analyzes secondary data on banking fraud cases from the last 5 years. The key findings are: - Private sector banks reported the highest number of fraud cases, while nationalized banks reported the highest total amounts involved in fraud cases. - The most common type of fraud cases reported were related to providing fake documents. - Delays in legal procedures for reporting frauds and loopholes in banking systems have contributed to higher instances of fraud. - It is recommended that banks improve internal fraud monitoring, risk management policies, and adherence to regulations to better prevent and identify frauds at early stages.

    Original Title

    MyIJAR2researchpaper

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document summarizes a research study on frauds in the Indian banking industry. It analyzes secondary data on banking fraud cases from the last 5 years. The key findings are: - Private sector banks reported the highest number of fraud cases, while nationalized banks reported the highest total amounts involved in fraud cases. - The most common type of fraud cases reported were related to providing fake documents. - Delays in legal procedures for reporting frauds and loopholes in banking systems have contributed to higher instances of fraud. - It is recommended that banks improve internal fraud monitoring, risk management policies, and adherence to regulations to better prevent and identify frauds at early stages.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    33 views3 pages

    A Study of Frauds in Banking Industry: Research

    Uploaded by

    Yurih Khei Jham Aluminum
    This document summarizes a research study on frauds in the Indian banking industry. It analyzes secondary data on banking fraud cases from the last 5 years. The key findings are: - Private sector banks reported the highest number of fraud cases, while nationalized banks reported the highest total amounts involved in fraud cases. - The most common type of fraud cases reported were related to providing fake documents. - Delays in legal procedures for reporting frauds and loopholes in banking systems have contributed to higher instances of fraud. - It is recommended that banks improve internal fraud monitoring, risk management policies, and adherence to regulations to better prevent and identify frauds at early stages.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 3

    See discussions, stats, and author profiles for this publication at: https://www.researchgate.

    net/publication/339739907

    A STUDY OF FRAUDS IN BANKING INDUSTRY

    Research · May 2019


    DOI: 10.13140/RG.2.2.19483.82722

    CITATIONS READS

    0 7,865

    2 authors, including:

    Ketan Patil
    Gujarat Forensic Sciences University
    9 PUBLICATIONS   0 CITATIONS   

    SEE PROFILE

    All content following this page was uploaded by Ketan Patil on 06 March 2020.

    The user has requested enhancement of the downloaded file.


    Volume-9 | Issue-5 | May-2019 | PRINT ISSN No 2249 - 555X
    Original Research Paper
    Management

    A STUDY OF FRAUDS IN BANKING INDUSTRY

    Mayur Abhyankar Sinhgad Institute of Management and Computer Applications, Pune


    Ketan Patil* Shri Vaishnav Vidyapeeth Vishwavidyalaya, Indore *Corresponding Author
    ABSTRACT The banking sector of India has found an ample amount of growth and differences from the liberation of the economy.
    Despite the fact that the banking sector has a better regulatory framework and it is well supervised, this sector experienced
    a variety of challenges when it comes to illegal practices & Financial frauds. This study enlightens issues such as frauds in the banking industry,
    illegal practices by using secondary data like literature review and case studies covering all the players involved in such malpractices. There are
    certain issues like rising in NPAs in recent years basically in public sector banks. The study also provides some proposals to reduce the degree of
    future frauds in the banking sector. This study also provides the numbers and type of frauds occurring in the Indian banking sector.

    KEYWORDS : Banking Fraud, Illegal practices, NPA


    INTRODUCTION frauds occurred in the world including Enron and WorldCom and
    In Layman's language fraud can be dened as a misrepresentation of Ocala funding. The accounting frauds can be subdivided into
    information which causes another person to endure loss basically a Demand Draft (DD) Fraud, remotely created Cheque fraud etc.
    nancial loss. If you take an example of a salesman he may lie about his 2. Cheque Kitting: - It is also known as “Float” where the money is
    name, place, birth date but he won't be called as a fraud as long as he counted twice. When such Cheque is cleared and deposited in Mr
    remains truthful about his product he sells. He should have provided A account the money gets credited immediately but at the same
    some misleading information about the product he sells that will cause time money is not debited from Mr B account through which the
    actual monetary damage to another person. Cheque is drawn. As a result, banks counted money twice because
    money is credited to one account but not debited from another
    Banking fraud most commonly involves tricky nancial transactions account.
    which are mostly done by White Collar Criminals, expertize people 3. Forged Documents: - Forged Documents (Property documents,
    having criminal intent, as fraud is not easily proven in courts. Because Letter of understanding) are used to get money illegally as a part of
    if appropriate actions, if not taken at the right time, may seriously borrowed loans by an individual and bank will unable to recover
    weaken the fraud case. So it is advised that such cases should be money in future as the loan was approved on the basis of forged
    investigated thoroughly. documents.
    4. Altered Cheque: - This is the most common type of banking fraud
    Banking Fraud can be dened as the use of malpractices to gain money, where fraudsters change the name on the Cheque or amount of
    assets, or any property held by any person or institution or to gain Cheque by simply putting extra 0 at the end. They also made an
    money from the depositor by a variety of fraudulent activities. Also, attempt to forge the signature of depositor on a blank Cheque and
    nancial fraud is not new to the Indian banking system because they then print it on their own Cheque is drawn on the accounts owned
    are regularly reported in recent years. These frauds are happened due to by others and withdraws the money immediately even before the
    the cost of business, its frequency and complexity of the framework. bank realize that the Cheque was a fraud.

    In the last 5 years' Public sector banks have lost total 22,743 crores due DATA INTERPRETATION
    to a variety of banking frauds. The investigation in those cases doesn't TABLE – 1 Bank Group Wise No. of Cases of Fraud
    only reveal the involvement of a person having criminal intent but also
    of middle-level employees and senior management of banks. This
    raises serious questions related to the effectiveness of the corporate
    framework of these banks. In recent years the rising trend of NPAs
    (Non-Performing Assets) mostly in public sector banks.

    Due to globalization and boom in the IT Industry, the investigator


    doesn't have proper training and background knowledge. Special
    investigator having expertise knowledge related to banking frauds
    need to be recruited just like FBI of USA and also cells like
    Maharashtra Police Department which are managing cyber-crimes
    very efciently.

    Frauds have been categorized by Reserve Bank of India depending on


    its types and provisions of Indian Penal Code, and guidelines have Source: PWC India
    been set according to RBI. RBI has also introduced a circular and Private sector banks have been reported highest number of banking
    notice the concept of Red Flags Account (RFA) on the basis of Early frauds.
    Warning Signals (EWS) for detection and prevention of Frauds. Also,
    Policy Guideline and Whistle Blower policies are also required as a TABLE – 2 Bank group Wise Total Amount Involved in Frauds
    preventive measure. MacGee in 2015 has suggested that there is a rise
    in consumer Bankruptcy because of higher aggregate borrowings
    which in turns results into higher defaults. A healthy relation between
    assets creation and GDP growth can provide early warning signs for
    systems to monitor the quality of the assets.

    Types of Banking Frauds may include: -


    1. Accounting Fraud: - To keep out of sight some nancial
    transaction some businessmen or owner use fraud accounting
    statement to show sales and income which shows worthy
    company assets to show a state of prot but actually company is in
    the loss. Then these accounting statements are used by these
    companies to make fraudulent bank loan applications to gain
    money to stabilize the company. There are a variety of accounting
    INDIAN JOURNAL OF APPLIED RESEARCH 1
    Volume-9 | Issue-5 | May-2019 | PRINT ISSN No 2249 - 555X
    Source: PWC India
    But the amount involved in these fraud cases are highest in
    Nationalized banks.

    TABLE – 3 Types of Frauds

    CONCLUSIONS
    Ÿ As per the data analysis, it is seen that the highest number of bank
    frauds are found in Public Sector Banks (PSB) and most cases of
    Bank Fraud which are reported are related to the provision of fake
    documents.
    Ÿ The delays in legal procedures for reporting and various loopholes
    in the system have been considered some of the major reasons for
    frauds. So it is recommended that such cases should be reported
    and investigated quickly.
    Ÿ It is recommended that Banks should have their own Fraud
    Vigilance & Surveillance Department who can conduct internal
    enquiry and can provide details of the same to external
    investigating agency for better results.
    Ÿ Fraudulent activities can be identied at an early stage and can be
    prevented by formulating proper risk management policy by
    adhering to laws and regulation which can increase the efciency
    and effectiveness of the existing procedure.

    REFERENCES
    [1] Reserve Bank of India (2014b), “Report of the Committee to the Review Governance of
    Boards of Banks in India” – (Chairman P.J. Nayak).
    [2] Reserve Bank of India (2015b), “Monitoring of large value frauds by the Board of
    Directors”, RBI Circulars.
    [3] PwC and Assocham (2014), “Growing NPAs in Banks: Efcacy of Credit Rating
    Agencies”. Rajan, R. G. (2014), “Competition in the Banking Sector: Opportunities and
    Challenges”.
    [4] Chakrabarty, K.C (2013), “Frauds in the banking sector: Causes, Cures and Concerns”,
    Inaugural address by Dr. K. C. Chakrabarty , Deputy Governor, Reserve Bank of India
    on July 26, 2013 during the National Conference on Financial Fraud organized by
    ASSOCHAM at New Delhi.

    2 INDIAN JOURNAL OF APPLIED RESEARCH

    View publication stats

    You might also like

    pFad - Phonifier reborn

    Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

    Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


    Alternative Proxies:

    Alternative Proxy

    pFad Proxy

    pFad v3 Proxy

    pFad v4 Proxy