INTRODUCTION

Banks are an essential part of the Indian economy.

While the primary responsibility for preventing frauds lies with banks themselves.

Banks are dealing with public's money and hence it is imperative that employees
should exercise due care and diligence in handling the transactions in banks.

The RBI has been advising banks from time to time about the major fraud prone
areas and the safeguards necessary for prevention of frauds.
 GENESIS OF THE RECENT
FRAUDS

i) Frauds by well-
iii) Frauds through
planned fraudsters ii) Frauds by the
collusion between
by exploiting the influential people in iv) Wilful defaulters.
the insiders and the
loopholes in the the society.
fraudsters.
system.
CAUSES OF FRAUDS IN BANKING
1. Greed

2. Lack of transparency

3. Poor management information

4. Excessively generous performance bonus payments

5. Non independent internal audit department

6. Lack of clear moral direction from senior management

7. Excessively complex organisational structure

PROCEDURE FOR FRAUD DETECTION AND
REPORTING IN PSBs
 THE BASIC ETHICAL PRINCIPLES IN
BANKING ARE
Principle of Mutual Trust

Principle of Mutual Benefit and Interest

Principle of Good Intentions

Principle of Business Compromise and Business Tolerance

Principle of ethical improvement of business behaviour

Principle of De-monopolization of One's Own Position

Principle of Conflict Between One's Own Interests

SOME EXAMPLES OF SCAMS IN
BANKING SECTOR