Rising Toll of Frauds in Banking: A Threat for the Indian Economy

Abstract

Banking is a process which predicts the relationship between sources of funds and their application. The basic process of banking helps the society to bridge the gap between availability and usage of these available funds in a correct manner. Over the years the banks have developed in a very big way, and with the growth of banking business, banking frauds have taken birth. The history of banking frauds is almost as old as the banking startup. Today, bank frauds have taken all possible forms and are prevalent in every facet of banking. There is a spirited need for banks to always stay alive to threat of frauds, build strong systems that can shield, pre-empt frauds, continuously monitor and review the efficiency of such preventive systems. To succeed in controlling frauds, banks need to be proactive and pre-emptive. This study establishes a theoretical framework with regards to banking frauds in the Indian context as well as shows the picture of frauds in banking sector outside India. By reviewing various studies in the area of banking frauds the paper built a research model which further helps to find out various types of frauds and reasons for the same, and will definitely give new scope to further studies. The present study sheds light on the area by reviewing various studies in the field of banking frauds. The study helps to find out the growth and trends of frauds in the banking sector and specially focuses on Indian Banking sector, as at present there are very few studies which give an in-depth insight of frauds in banking sector. Further the study also reviews the role of employee and customer with regard to banking fraud studied which is primarily needed in the context of Indian Banking system. The present study is conducted by collecting secondary data from the published and unpublished Sources, Government Publications, journals, magazines, books and periodicals etc

  • Page Number : 71-88

  • Keywords
    Banks, Frauds, Cyber Frauds, Prevention Techniques, Bank Employee Loyalty, Customer Satisfaction, banking frauds in india, research articles on bank frauds, indian economy

  • DOI Number
    https://doi.org/10.15415/jtmge.2018.91003

  • Authors

    • Neha SharmaSchool of Management Studies, Punjabi University, Patiala (Punjab)
    • Dhiraj SharmaSchool of Management Studies, Punjabi University, Patiala (Punjab)

References

  • Serah, A. (2014) “Prosecuting Bank Fraud in Kenya: Challenges faced by the Banking Sector”, Journal of Finance Management and Public Services, Volume 14, Issue. 1, p- 60- 78.
  • Anthala, H. R. (2014) “Research paper on Case laws of Fraud, forgery and Corruption in Banks and Financial Institutions in India”, IOSR Journal of Economics and Finance, Volume 3, Issue 6. P 53-57.
  • Bamrara, A., Singh, G. & Bhatt, M. (2013) “Cyber attacks and defence strategies in India- An Empirical assessment of Banking Sector”, International Journal of Cyber Criminology, Volume 7 issue. 1, p- 49- 61. http://dx.doi.org/10.2139/ssrn.2488413.
  • Banking Regulation Act (1949), available at www.cooperation.ap.gov.in/pdf/BR%20Act% 201949.pdf retrieved on 19.09.2015
  • Bhasin, M. L. (2015) “Menace of Frauds in the Indian Banking Industry: An Empirical Study. Australian, Journal of business management and research, Volume 4, Issue 12, p- 1-13. http://dx.doi.org/10.2139/ssrn.2676466.
  • Bhatia, R. (2009) “Banking frauds-- a four billion rupees industry, accessed at accman.in/ gyanpj14/5.pdf.
  • Bhattacharjee, K. (2007) “Reverse Mortgage - A Novel Financial Product for Elderly People.
  • Bologna, J.G., (1994) “How to detect and prevent embezzlement? The White Paper, August/ September, p 4.
  • Calderon, T. and Green, B.P. (1994), Internal fraud leaves its mark: here’s how to spot, trace and prevent it”, National Public Accountant, Vol. 39, August, p. 17.
  • Chiezey, U. & Onu Agbo J. C. (2013), Impact of Fraud and Fraudulent Practices on the Performance of Banks in Nigeria. British Journal of Arts and Social Sciences. Vol.15 No.1. p. 12-28.
  • Cressey D. (1973), Others Peoples Money: A study in the Social Psychology of Embezzlement. Montclair, N. J. Patterson Smith
  • Deloitte, (2015), Indian banking fraud survey: Edition II. Retrieved on August 15, 2015, from http://www.deloitte.com.
  • Deloitte (2017), India Fraud Survey: Edition II. Retrieved on September 02, 2017 from http:// deloitte.com.
  • Fink, A., (2010), Conducting Research Literature Reviews, From the Internet to Paper, 3rd Edition, Los Angeles: Sage Publications
  • Francis Louise (2010), Banking on Robbery: The Role of Fraud in the Financial Crisis. Casualty Actuarial Society E-Forum, Fall 2010-Volume 2
  • Ghosh A (1992), RBI committee Report on Various aspects relating to fraud malpractice in Banks, pp. 4-10
  • Hoffmann Arvid O.I. & Birnbrich Cornelia (2012), The impact of fraud prevention on bank customer relationships: An empirical investigation in retail banking. International Journal of Bank Marketing. Vol. 30 No. 5, p. 390- 407.
  • Indian Bank (2014), Fraud Risk Management Policy 2014- 15. Retrieved at aiiboa.in.
  • Indian Bank Association (2011), Evolution of Indian Banking Sector, Aranca Research, BMI. Retrieved at iba.org.in.
  • Khanna, A. and Arora, B. (2009) “A study to investigate the reasons for bank frauds and the implementation of preventive security controls in Indian banking industry”, International Journal of Business Science and Applied Management, Vol. 4, Issue. 3. pp 1- 21.
  • Kingsley A. Adeyemo (2012), Frauds in Nigerian Banks: Nature, Deep-Seated Causes, Aftermaths and Probable Remedies. Mediterranean Journal of Social Sciences. Vol.3 Issue 2. P- 279- 289.
  • Kiragu, N. D., Gikiri. W. L & Iminza, N.W (2015) “Bank size and occupational fraud risk: empirical evidence from commercial banks in Kenya”, European Journal of Business Management, Vol. 2, Issue 1, p- 189-404.
  • Manikyam K. Ratna (2014) “Indian Banking Sector: Challenges and Opportunities”, IOSR Journal of Business and Management, Vol. 16, Issue 2, Ver. 1, p- 52- 61.
  • Pan, G., Seow, P. S., Suwardy, T., & Gay, E. (2011) “Fraud: A Review and Research Agenda. Journal of Accountancy Business and the Public Interest, Vol- 10, p- 138-178.
  • RBI (2008) “Evolution of banking in India, available at https://rbi.org.in/scripts/PublicationsView. aspx?id=10487.
  • RBI (2013) “Frauds in the Banking Sector: Causes, Concerns and Cures, available at https:// rbi.org.in/scripts/BS_SpeechesView.aspx?Id=826
  • RBI (2014), Appropriation of Profit of Scheduled Commercial Banks, available at http://dbie. rbi.org.in/OpenDocument/opendoc/openDocument.jsp.
  • RBI (2015), Master circular-Frauds –Future approach towards monitoring of frauds in NBFCs, July 2015, retrieved at rbi.org.in.
  • Sharma, S. and Brahma (2000) “A Role of Insider in banking Fraud”, available at http;//manuputra .com
  • Siddique M. Imran & Rehman Sana (2011), Impact of Electronic crime in Indian Banking Sector – An Overview. Int. J Busi. Inf. Tech. Vol. 1, No.2, p-159-164.
  • Singh Charan et al. (2016), Frauds in the Indian Banking Industry, IIMB-WP N0. 505, pp. 1-24.
  • Soni R.R. and Soni Neena (2013) “An Investigative Study of Banking Cyber Frauds with Special Reference to Private and Public Sector Banks”, Research Journal of Management Sciences. Vol. 2 Issue 7, p- 22-27.
  • The Economic Times: Mar (2017), ICICI Bank, SBI, StanChart top bank frauds list: RBI, Retrieved from: http://economictimes.indiatimes.com/industry/banking/finance/banking/ icici-bank-sbi-stanchart-top-bank-frauds-list-rbi/printarticle/57604612.cms
  • The Economic Times: May (2017), Demonetization fraud: Court denies bail to private bank manager, Retrieved from: http://economictimes.indiatimes.com/news/politics-and-nation/ demonetisation-fraud-court-denies-bail-to-private-bank-manager/printarticle/58824843. Cms
  • The Tribune: Mar (2016), Four arrested for Rs 52-lakh fraud, retrieved from http://www. tribuneindia.com/news/punjab/crime/four-arrested-for-rs-52-lakh-fraud/213445.html.
  • The Tribune: Jul (2016), Fraud in farm loans detected at SBOP, Retrieved from: http://www. tribuneindia.com/news/jalandhar/fraud-in-farm-loans-detected-at-sbop/264714.html.
  • The Tribune: Mar (2017), Four ex-bank officials among 10 booked for Rs 209-cr fraud, Retrieved from: http://www.tribuneindia.com/news/nation/four-ex-bank-officials-among10-booked-for-rs-209-cr-fraud/382332.html.
  • The Tribune: Jul (2017), Couple booked for fraud, Retrieved from: http://www.tribuneindia. com/news/punjab/couple-booked-for-fraud/444187.html.
  • Vousinas Georgios L. (2016), The critical role of Internal Auditing in addressing bank fraud: A conceptual framework, Case Studies Journal ISSN (2305-509X) – Volume 5, Issue 3– March-2016, Pp. 67-81.
  • Willson R. (2006), Understanding the offender/environment dynamics for computer crimes. Information Technology and People Vol. 19, Issue 2, p-170-186.

  • Published Date : --