An Empirical Study of Frauds in the Banks

Download or read book An Empirical Study of Frauds in the Banks written by Madan Lal Bhasin and published by . This book was released on 2016 with total page 12 pages. Available in PDF, EPUB and Kindle. Book excerpt: Banks are the engines that drive the operations in the financial sector, money markets and growth of an economy. With the rapidly growing banking industry in India, frauds in banks are also increasing very fast, and fraudsters have started using innovative methods. As part of the study, a questionnaire-based survey was conducted in 2012-13 among 345 bank employees “to know their perception towards bank frauds and evaluate the factors that influence the degree of their compliance level.” The study revealed that there are poor employment practices and lack of effective training; over-burdened staff, weak internal control systems, and low compliance levels on the part of Bank Managers, Offices and Clerks.Although banks cannot be 100% secure against unknown threats, a certain level of preparedness can go a long way in countering fraud risk. Internal audit professionals should play an integral role in their organization's fraud-fighting efforts. Some of other promising steps to control frauds are: educate customers about fraud prevention, make application of laws more stringent, leverage the power of data analysis technologies, follow fraud mitigation best practices, and employ multipoint scrutiny. In 2015, the RBI has introduced new mechanisms for banks to check loan frauds by taking pro-active steps by setting up a Central Fraud Registry, introduced the concept of Red Flagged Account, and Indian investigative agencies (CBI, CEIB) will soon start sharing their databases with banks.