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Fraud In Banking Sector Essay

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2.2 Frauds and the Areas of Frauds in banking sector

Fraud is a kind of behavior by which one person is intending to gain a “dishonest” advantage by one over another. A bank fraud is deliberate act of omission or commission by any person carried out in the course of a banking transaction or books in the books of account maintained manually or under the computer system in bank, resulting into wrongful gain to any person for a temporary period or otherwise, with or without any monetary loss to bank.
Frauds occur due to the non-observance of systems, regulations and procedures are not followed meticulously and rigidly and “Modus Operandi” of the fraud conveys that somebody is somewhere is failing in the observance of the rules and regulations and …show more content…

Cash shortage too frequently • Cash keys to be kept under dual custody and properly recording the moment of keys.
• Cash safes to be operated by custodians together.
• No unauthorized person to be allowed in cash strong room

and cash department enclosures.
• Physical verification of cash to be invariably undertaken each day after close of business hours.

Irregularities in foreign exchange transactions

• Strict enforcement of RBI guidelines relating to such transactions.
• Establishing in the full-proof manner the credentials of prospective customer before embarking banking transactions with him.
• Judicial approach to be undertaken while taking such matters.

False letter of credit submission

• Confirmation to be called on from bank immediately on submission of letter of credit by the party.
• Through scrutiny of letter of credit to detect onerous clause.
• Evaluating the terms/ conditions to verify the practical enforceability or otherwise.
• Loan account not to be opened for those who do not enjoy credit facilities.
• The customer’s ability to retire under the loan account has to be considered and

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