Banking Fraud – Prevention and Management

Banking Fraud is posing menace to Indian Financial system. Its vibrant impact will be understood be the truth that within the yr 2004 variety of Cyber Crime had been 347 in India which rose to 481 in 2005 exhibiting a rise of 38.5% whereas I.P.C. class crime stood at 302 in 2005 together with 186 instances of cyber fraud and 68 circumstances cyber forgery. Thus it turns into crucial that incidence of such frauds ought to be minimized. Extra upsetting is the truth that such frauds are coming into in Banking Sector as effectively World Update Reviews.

Within the current day, World State of affairs Banking System has acquired new dimensions. Banking did unfold in India. In the present day, the banking system has entered into aggressive markets in areas protecting useful resource mobilization, human useful resource improvement, buyer companies and credit score administration as properly.

Indian’s banking system has a number of excellent achievements to its credit score, essentially the most placing of which is its attain. In reality, Indian banks are actually unfold out into the remotest areas of our nation. Indian banking, which was working in a extremely comfy and guarded surroundings until the start of 1990s, has been pushed into the uneven waters of intense competitors.

A sound banking system ought to possess three fundamental traits to guard depositor’s curiosity and public religion. Theses are (i) a fraud free tradition, (ii) a time examined Finest Apply Code, and (iii) an in home fast grievance remedial system. All these circumstances are their lacking or extraordinarily weak in India. Part 5(b) of the Banking Regulation Act, 1949 defines banking… “Banking is the accepting for the aim of lending or funding, deposits of cash from the aim of lending or funding, deposits of cash from the general public, repayable on demand or in any other case and withdraw in a position by cheque, draft, order or in any other case.” But when his cash has fraudulently been drawn from the financial institution the latter is underneath strict obligation to pay the depositor. The financial institution due to this fact has to make sure always that the cash of the depositors shouldn’t be drawn fraudulently. Time has come when the safety features of the banks must be handled on precedence foundation.

The banking system in our nation has been caring for all segments of our socio-economic arrange. The Article incorporates a dialogue on the rise of banking frauds and varied strategies that can be utilized to keep away from such frauds. A financial institution fraud is a deliberate act of omission or fee by any individual carried out in the midst of banking transactions or within the books of accounts, leading to wrongful achieve to any particular person for a short lived interval or in any other case, with or with none financial loss to the financial institution. The related provisions of Indian Penal Code, Prison Process Code, Indian Contract Act, and Negotiable Devices Act referring to banking frauds has been cited within the current Article.

EVOLUTION OF BANKING SYSTEM IN INDIA

Banking system occupies an essential place in a nation’s financial system. A banking establishment is indispensable in a contemporary society. It performs a pivotal function in financial improvement of a rustic and kinds the core of the cash market in a complicated nation.

Banking business in India has traversed an extended approach to assume its current stature. It has undergone a significant structural transformation after the nationalization of 14 main business banks in 1969 and 6 extra on 15 April 1980. The Indian banking system is exclusive and maybe has no parallels within the banking historical past of any nation on this planet.

RESERVE BANK OF INDIA-ECONOMIC AND SOCIAL OBJECTIVE

The Reserve Financial institution of India has an necessary position to play within the upkeep of the alternate worth of the rupee in view of the shut interdependence of worldwide commerce and nationwide financial progress and nicely being. This side is of the broader responsibly of the central financial institution for the upkeep of financial and monetary stability. For this the financial institution is entrusted with the custody and the administration of nation’s worldwide reserves; it acts additionally because the agent of the federal government in respect of India’s membership of the worldwide financial fund. With financial growth the financial institution additionally performs a wide range of developmental and promotional features which previously had been registered being outdoors the conventional purview of central banking. It additionally acts an essential regulator.

BANK FRAUDS: CONCEPT AND DIMENSIONS

Banks are the engines that drive the operations within the monetary sector, which is significant for the economic system. With the nationalization of banks in 1969, additionally they have emerged as engines for social change. After Independence, the banks have handed by three phases. They’ve moved from the character based mostly lending to ideology primarily based lending to right this moment competitiveness primarily based lending within the context of India’s financial liberalization insurance policies and the method of linking with the worldwide financial system.

Whereas the operations of the financial institution have turn into more and more vital banking frauds in banks are additionally rising and fraudsters have gotten increasingly refined and ingenious. In a bid to maintain tempo with the altering occasions, the banking sector has diversified it enterprise manifold. And the previous philosophy of sophistication banking has been changed by mass banking. The problem in administration of social duty with financial viability has elevated.

DEFINITION OF FRAUD

Fraud is outlined as “any conduct by which one particular person intends to achieve a dishonest benefit over one other”. In different phrases , fraud is an act or omission which is meant to trigger wrongful acquire to at least one individual and wrongful loss to the opposite, both by means of concealment of details or in any other case.

Fraud is outlined u/s 421 of the Indian Penal Code and u/s 17 of the Indian Contract Act. Thus important components of frauds are:

1. There have to be a illustration and assertion;

2. It should relate to a truth;

three. It should be with the data that it’s false or with out perception in its fact; and

four. It should induce one other to behave upon the assertion in query or to do or to not do sure act.

BANK FRAUDS

Losses sustained by banks on account of frauds exceed the losses attributable to theft, dacoity, housebreaking and theft-all put collectively. Unauthorized credit score amenities are prolonged for unlawful gratification akin to case credit score allowed towards pledge of products, hypothecation of products in opposition to payments or towards guide money owed. Frequent modus operandi are, pledging of spurious items, inletting the worth of products, hypothecating items to a couple of financial institution, fraudulent removing of products with the information and connivance of in negligence of financial institution workers, pledging of products belonging to a 3rd occasion. Items hypothecated to a financial institution are discovered to include out of date shares packed in between items shares and case of scarcity in weight shouldn’t be unusual.

An evaluation manufactured from instances brings out broadly the underneath talked about 4 main parts answerable for the fee of frauds in banks.

1. Energetic involvement of the staff-both supervisor and clerical both impartial of exterior components or in connivance with outsiders.

2. Failure on the a part of the financial institution workers to observe meticulously laid down directions and pointers.

three. Exterior parts perpetuating frauds on banks by forgeries or manipulations of cheques, drafts and different devices.

four. There was a rising collusion between enterprise, prime banks executives, civil servants and politicians in energy to defraud the banks, by getting the foundations bent, rules flouted and banking norms thrown to the winds.

FRAUDS-PREVENTION AND DETECTION

A detailed research of any fraud in financial institution reveals many widespread fundamental options. There could have been negligence or dishonesty at some stage, on a part of a number of of the financial institution workers. One among them could have colluded with the borrower. The financial institution official could have been placing up with the borrower’s sharp practices for a private acquire. The correct care which was anticipated of the employees, as custodians of banks curiosity could not have been taken. The financial institution’s guidelines and procedures laid down within the Guide directions and the circulars might not have been noticed or might have been intentionally ignored.

Financial institution frauds are the failure of the banker. It doesn’t imply that the exterior frauds don’t defraud banks. But when the banker is upright and is aware of his job, the duty of defrauder will develop into extraordinarily troublesome, if not doable.

Detection of Frauds

Regardless of all care and vigilance there should still be some frauds, although their quantity, periodicity and depth could also be significantly decreased. The next process could be very useful if considered:

1. All related data-papers, paperwork and many others. Needs to be promptly collected. Unique vouchers or different papers forming the premise of the investigation ought to be saved beneath lock and key.

2. All individuals within the financial institution who could also be realizing one thing in regards to the time, place a modus operandi of the fraud must be examined and their statements needs to be recorded.

three. The possible order of occasions ought to thereafter be reconstructed by the officer, in his personal thoughts.

four. It’s advisable to maintain the central workplace knowledgeable in regards to the fraud and additional developments in regard thereto.

Classification of Frauds and Motion Required by Banks

The Reserve Financial institution of India had set-up a excessive stage committee in 1992 which was headed by Mr. A… Ghosh, the then Dy. Governor Reserve Financial institution of India to inquire into numerous points regarding frauds malpractice in banks. The committee had observed/noticed three main causes for perpetration of fraud as given hereunder:

1. Laxity in observance of the laid down system and procedures by operational and supervising employees.

2. Over confidence reposed within the shoppers who indulged in breach of belief.

three. Unscrupulous shoppers by taking benefits of the laxity in observance of established, time examined safeguards additionally dedicated frauds.

To be able to have uniformity in reporting circumstances of frauds, RBI thought of the query of classification of financial institution frauds on the idea of the provisions of the IPC.

Given under are the Provisions and their Remedial measures that may be taken.

1. Dishonest (Part 415, IPC)

Remedial Measures.

The preventive measures in respect of the dishonest could be targeting cross-checking concerning identification, genuineness, verification of particulars, and many others. in respect of assorted devices in addition to individuals concerned in encashment or coping with the property of the financial institution.

2. Legal misappropriation of property (Part 403 IPC).

Remedial Measure

Prison misappropriation of property, presuppose the custody or management of funds or property, so subjected, with that of the particular person committing such frauds. Preventive measures, for this class of fraud needs to be taken on the degree the custody or management of the funds or property of the financial institution typically vests. Such a measure must be adequate, it’s prolonged to those individuals who’re truly dealing with or having precise custody or management of the fund or movable properties of the financial institution.

three. Prison breach of belief (Part 405, IPC)

Remedial Measure

Care needs to be taken from the preliminary step when an individual involves the financial institution. Care must be taken on the time of recruitment in financial institution as nicely.

four. Forgery (Part 463, IPC)

Remedial Measure

Each the prevention and detection of frauds by way of forgery are essential for a financial institution. Forgery of signatures is essentially the most frequent fraud in banking enterprise. The financial institution ought to take particular care when the instrument has been introduced both bearer or order; in case a financial institution pays cast instrument he could be accountable for the loss to the real costumer.

5. Falsification of accounts (Part 477A)

Remedial Measure

Correct diligence is required whereas filling of kinds and accounts. The accounts needs to be rechecked on every day foundation.

6. Theft (Part 378, IPC)

Remedial Measures

Encashment of stolen’ cheque will be prevented if the financial institution clearly specify the age, intercourse and two seen establish motion marks on the physique of the particular person traveler’s cheques on the again of the cheque leaf. This can assist the paying financial institution to simply determine the cheque holder. Theft from lockers and protected deposit vaults aren’t straightforward to commit as a result of the master-key stays with the banker and the person key of the locker is handed over to the costumer with due acknowledgement.

7. Legal conspiracy (Part 120 A, IPC)

Within the case of State of Andhra Pradesh v. IBS Prasad Rao and Different, the accused, who have been clerks in a cooperative Central Financial institution have been all convicted of the offences of dishonest underneath Part 420 learn together with Part 120 A. all of the 4 accused had conspired collectively to defraud the financial institution by making false demand drafts and receipt vouchers.

eight. Offences regarding forex notes and banks notes (Part 489 A-489E, IPC)

These sections present for the safety of currency-notes and financial institution notes from forgery. The offences beneath part are:

(a) Counterfeiting foreign money notes or banks.

(b) Promoting, shopping for or utilizing as real, cast or counterfeit foreign money notes or financial institution notes. Figuring out the identical to be cast or counterfeit.

(c) Possession of solid or counterfeit foreign money notes or bank-notes, realizing or counterfeit and intending to make use of the identical as real.

(d) Making or passing devices or supplies for forging or counterfeiting forex notes or banks.

(e) Making or utilizing paperwork resembling currency-notes or financial institution notes.

Many of the above provisions are Cognizable Offences underneath Part 2(c) of the Code of Prison Process, 1973.

FRAUD PRONE AREAS IN DIFFERENT ACCOUNTS

The next are the potential fraud inclined areas in Banking Sector. Along with these areas I’ve additionally given sorts of fraud which might be widespread in these areas.

Financial savings Financial institution Accounts

The next are a number of the examples being performed in respect of financial savings financial institution accounts:

(a) Cheques bearing the cast signatures of depositors could also be offered and paid.

(b) Specimen signatures of the depositors could also be modified, notably after the demise of depositors,

(c) Dormant accounts could also be operated by dishonest individuals with or with out collusion of financial institution workers, and

(d) Unauthorized withdrawals from buyer’s accounts by worker of the financial institution sustaining the financial savings ledger and later destruction of the current vouchers by them.

Present Account Fraud

The next varieties are prone to be dedicated in case of present accounts.

(a) Opening of frauds within the names of restricted firms or corporations by unauthorized individuals;

(b) Presentation and cost of cheques bearing solid signatures;

(c) Breach of belief by the workers of the businesses or companies possessing cheque leaves duly signed by the licensed signatures;

(d) Fraudulent alteration of the quantity of the cheques and getting it paid both on the counter or although one other financial institution.

Frauds In Case Of Advances

Following sorts could also be dedicated in respect of advances:

(a) Spurious gold ornaments could also be pledged.

(b) Sub-standard items could also be pledged with the financial institution or their worth could also be proven at inflated figures.

(c) Identical items could also be hypothecated in favour of various banks.

LEGAL REGIME TO CONTROL BANK FRAUDS

Frauds represent white-collar crime, dedicated by unscrupulous individuals deftly benefit of loopholes present in techniques/procedures. The best state of affairs is one there isn’t any fraud, however taking floor realities of the nation’s atmosphere and human nature’s fragility, an establishment ought to at all times wish to preserve the overreach of frauds on the minimal prevalence stage.

Following are the related sections referring to Financial institution Frauds

Indian Penal Code (45 of 1860)

(a) Part 23 “Wrongful acquire”.-

“Wrongful achieve” is acquire by illegal technique of property to which the particular person gaining just isn’t legally entitled.

(b) “Wrongful loss”

“Wrongful loss” is the loss by illegal technique of property to which the individual shedding it’s legally entitled.

(c) Gaining wrongfully.

Dropping wrongfully-An individual is alleged to realize wrongfully when such individual retains wrongfully, in addition to when such particular person acquires wrongfully. An individual is alleged to lose wrongfully when such individual is wrongfully stored out of any property, in addition to when such individual is wrongfully disadvantaged of property.

(d) Part 24. “Dishonestly”

Whoever does something with the intention of inflicting wrongful acquire to at least one particular person or wrongful loss to a different particular person, is alleged to do this factor “dishonestly”.

(e) Part 28. “Counterfeit”

An individual is claimed to “counterfeit” who causes one factor to resemble one other factor, intending via that resemblance to observe deception, or understanding it to be probably that deception will thereby be practiced.

BREACH OF TRUST

1. Part 408- Felony breach of belief by clerk or servant.

2. Part 409- Legal breach of belief by public servant, or by banker, service provider or agent.

three. Part 416- Dishonest by personating

four. Part 419- Punishment for dishonest by personation.

OFFENCES RELATING TO DOCMENTS

1) Part 463-Forgery

2) Part 464 -Making a false doc

three) Part 465- Punishment for forgery.

four) Part 467- Forgery of beneficial safety, will, and so on

5) Part 468- Forgery for goal of dishonest

6) Part 469- Forgery for function of harming status

7) Part 470- Cast doc.

eight) Part 471- Utilizing as real a solid doc

9) Part 477- Fraudulent cancellation, destruction, and so on., of will, authority to undertake, or priceless safety.

10) Part 477A- Falsification of accounts.

THE RESERVE BANK OF INDIA ACT, 1934

Challenge of demand payments and notes Part 31.

Supplies that solely Financial institution and besides supplied by Central Authorities shall be approved to attract, settle for, make or situation any invoice of alternate, hundi, promissory word or engagement for the fee of cash payable to bearer on demand, or borrow, owe or take up any sum or sums of cash on the payments, hundis or notes payable to bearer on demand of any such individual

THE NEGOTIABLE INSTRUMENTS ACT, 1881

Holder’s proper to duplicate of misplaced invoice Part 45A.

1. The finder of misplaced invoice or notice acquires no title to it. The title stays with the true proprietor. He’s entitled to get better from the true proprietor.

2. If the finder obtains cost on a misplaced invoice or word in the end, the payee could possibly get a sound discharge for it. However the true proprietor can get better the cash due on the instrument as damages from the finder.

Part 58

When an Instrument is obtained by illegal means or for illegal consideration no possessor or indorse who claims via the one who discovered or so obtained the instrument is entitled to obtain the quantity due thereon from such maker, acceptor or holder, or from any occasion previous to such holder, except such possessor or indorse is, or some particular person by means of whom he claims was, a holder thereof sooner or later.

Part 85:

Cheque payable to order.

1. By this part, bankers are positioned in privileged place. It offers that if an order cheque is indorsed by or on behalf of the payee, and the banker on whom it’s drawn pays it sooner or later, the banker is discharged. He can debit his buyer with the quantity so paid, although the endorsement of the payee may change into a forgery.

2. The declare safety below this part the banker has to show that the fee was a cost in the end, in good religion and with out negligence.

Part 87. Impact of fabric alteration

Below this part any alteration made with out the consent of social gathering could be void. Alteration can be legitimate provided that is made with frequent intention of the get together.

Part 138. Dishonour of cheque for insufficiency, and many others., of funds within the account.

The place any cheque drawn by an individual on an account maintained by him with a banker for fee of any sum of money to a different particular person from out of that account for the discharge, in entire or partially, of any debt or different legal responsibility, is returned by the financial institution unpaid. both due to the sum of money standing to the credit score of that account is inadequate to honour the cheque or that it exceeds the quantity organized to be paid from that account by an settlement made with that financial institution, such particular person shall be deemed to have dedicated an offence and shall, with out prejudice.

Part 141(1) Offences by corporations.

If the particular person committing an offence underneath Part 138 is an organization, each one that, on the time the offence was dedicated, was accountable for, and was accountable to, the corporate for the conduct of the enterprise of the corporate, in addition to the corporate, shall be deemed to be responsible of the offence and shall be liable to be proceeded in opposition to and punished accordingly.

SECURITY REGIME IN BANKING SYSTEM

Safety implies sense of security and of freedom from hazard or anxiousness. When a banker takes a collateral safety, say within the type of gold or a title deed, towards the cash lent by him, he has a way of security and of freedom from anxiousness in regards to the attainable non-payment of the mortgage by the borrower. These must be communicated to all strata of the group by way of acceptable means. Earlier than employees managers ought to analyze present practices. Safety process must be acknowledged explicitly and agreed upon by every person within the particular setting. Such practices guarantee data safety and improve availability. Financial institution safety is basically a protection in opposition to unforced assaults by thieves, dacoits and burglars.

PHYSICAL SECURITY MEASURES-CONCEPT

A big a part of banks safety will depend on social safety measures. Bodily safety measures could be outlined as these particular and particular protecting or defensive measures adopted to discourage, detect, delay, defend and defeat or to carry out any a number of of those features towards culpable acts, each covert and covert and acclamations pure occasions. The protecting or defensive, measures adopted contain building, set up and deployment of constructions, tools and individuals respectively.

The next are few tips to examine malpractices:

1. To rotate the money work inside the employees.

2. One particular person shouldn’t proceed on the identical seat for greater than two months.

three. Daybook shouldn’t be written by the Cashier the place an different individual is on the market to the job

four. No money withdrawal must be allowed inside passbook in case of withdrawal by pay order.

5. The department supervisor ought to be sure that all employees members have recorder their presence within the attendance registrar, earlier than beginning work.

Execution of Paperwork

1. A financial institution officer should undertake a strict skilled method within the execution of paperwork. The ink and the pen used for the execution have to be maintained uniformly.

2. Financial institution paperwork shouldn’t be typed on a typewriter for execution. These must be invariably handwritten for execution.

three. The execution ought to at all times be executed within the presence of the officer liable for get hold of them,

four. The debtors needs to be requested to sign up full signatures in similar model all through the paperwork.

5. Except there’s a particular requirement within the doc, it shouldn’t be received attested or witnessed as such attestation might change the character of the devices and the paperwork might topic to advert volrem stamp responsibility.

6. The paper on which the financial institution paperwork are made ought to be pilfer proof. It needs to be distinctive and out there to the banks solely.

7. The printing of the financial institution paperwork ought to have extremely inventive intricate and sophisticated graphics.

eight. The paperwork executed between Banker and Debtors should be stored in secure custody,

CHANGES IN LEGISLATIONS AFTER ELECTRONIC TRANSACTIONS

1. Part 91 of IPC shall be amended to incorporate digital paperwork additionally.

2. Part 92 of Indian Proof Act, 1872 shall be amended to incorporate commuter based mostly communications

three. Part 93 of Bankers E-book Proof Act, 1891 has been amended to offer authorized sanctity for books of account maintained within the digital kind by the banks.

four. Part 94 of the Reserve Financial institution of India Act, 1939 shall be amended to facilitate digital fund transfers between the monetary establishments and the banks. A brand new clause (pp) has been inserted in Part 58(2).

RECENT TRENDS OF BANKING SYSTEM IN INDIA

Within the banking and monetary sectors, the introduction of digital expertise for transactions, settlement of accounts, book-keeping and all different associated capabilities is now an crucial. More and more, whether or not we prefer it or not, all banking transactions are going to be digital. The thrust is on commercially necessary facilities, which account for 65 p.c of banking enterprise by way of worth. There are actually a lot of absolutely computerized branches throughout the nation.

A switchover from cash-based transactions to paper-based transactions is being accelerated. Magnetic Ink character recognition clearing of cheques is now operational in lots of cities, beside the 4 metro cities. In India, the design, administration and regulation of electronically-based funds system have gotten the main focus of coverage deliberations. The imperatives of growing an efficient, environment friendly and speedy cost and settlement methods are getting sharper with introduction of recent devices akin to bank cards, telebanking, ATMs, retail Digital Funds Switch (EFT) and Digital Clearing Providers (ECS). We’re shifting in direction of sensible playing cards, credit score and monetary Digital Information Interchange (EDI) for straight by means of processing.

Monetary Fraud (Investigation, Prosecution, Restoration and Restoration of property) Invoice, 2001

Additional the Monetary Fraud (Investigation, Prosecution, Restoration and Restoration of property) Invoice, 2001 was launched in Parliament to curb the menace of Financial institution Fraud. The Act was to ban, management, examine monetary frauds; get well and restore properties topic to such fraud; prosecute for inflicting monetary fraud and issues linked therewith or incidental thereto.

Below the mentioned act the time period Monetary Fraud has been outlined as underneath:

Part 512 – Monetary Fraud

Monetary frauds means and contains any of the next acts dedicated by an individual or along with his connivance, or by his agent, in his dealings with any financial institution or monetary establishment or every other entity holding public funds;

1. The suggestion, as a truth, of that which isn’t true, by one who doesn’t consider it to be true;

2. The lively concealment of a reality by one having information or perception of the very fact;

three. A promise made with out any intention of performing it;

four. Another act fitted to deceive;

5. Any such act or omission because the regulation specifically declares to be fraudulent.

Offered that whoever acquires, possesses or transfers any proceeds of economic fraud or enters into any transaction which is expounded to proceeds of fraud both instantly or not directly or conceals or aids within the concealment of the proceeds of monetary fraud, commits monetary fraud.

513(a) – Punishment for Monetary Fraud

Whoever commits monetary fraud shall be: (a) Punished with rigorous imprisonment for a time period, which can lengthen to seven years and shall even be liable to tremendous.

(b)Whoever commits severe monetary fraud shall be punished with rigorous imprisonment for a time period which can lengthen to 10 years however shall not be lower than 5 years and shall even be responsible for advantageous as much as double the quantity concerned in such fraud.

Offered that in each (a) and (b) all funds, financial institution accounts and properties acquired utilizing such funds subjected to the monetary fraud as could fairly be attributed by the investigating company shall be recovered and restored to the rightful proprietor based on the process established by legislation.

CONCLUSION

The Indian Banking Trade has undergone large development since nationalization of 14 banks within the yr 1969. There has an virtually eight instances enhance within the financial institution branches from about 8000 throughout 1969 to mote than 60,000 belonging to 289 business banks, of which 66 banks are in non-public sector.

It was the results of two successive Committees on Computerization (Rangarajan Committee) that set the tone for computerization in India. Whereas the primary committee drew the blue print in 1983-84 for the mechanization and computerization in banking business, the second committee arrange in 1989 paved the best way for built-in use of telecommunications and computer systems for making use of technogical breakthroughs in banking sector.

Nevertheless, with the unfold of banking and banks, frauds have been on a continuing improve. It might be a pure corollary to extend within the variety of prospects who’re utilizing banks lately. Within the yr 2000 alone we have now misplaced Rs 673 crores in as many as three,072 variety of fraud circumstances. These are solely reported figures. Although, that is zero.075% of Rs eight,96,696 crores of whole deposits and zero.15% of Rs four,44,125 crores of loans & advances, there are any numbers of circumstances that aren’t reported. There have been almost 65,800 financial institution branches of a complete of 295 industrial banks in India as on June 30, 2001 reporting a complete of practically three,072 financial institution fraud circumstances. This makes practically 10.four frauds per financial institution and roughly zero.47 frauds per department.

An Knowledgeable Committee on Financial institution Frauds (Chairman: Dr.N.L.Mitra) submitted its Report back to RBI in September 2001. The Committee examined and urged each the preventive and healing elements of financial institution frauds.

The necessary suggestions of the Committee embody:

o A necessity for together with monetary fraud as a legal offence;

o Amendments to the IPC by together with a brand new chapter on monetary fraud;

o Amendments to the Proof Act to shift the burden of proof on the accused particular person;

o Particular provision within the Cr. PC for properties concerned within the Monetary Fraud.

o Confiscating illegal positive aspects; and preventive measures together with the event of Greatest Code Procedures by banks and monetary establishments.

Thus it may be concluded that following measures ought to essentially be adopted by the Ministry of Finance to be able to cut back circumstances of Fraud.

o There have to be a Particular Courtroom to attempt monetary fraud instances of significant nature.

o The legislation ought to present separate structural and restoration process. Each financial institution should have a home enquiry officer to investigate in regards to the civil dimension of fraud.

o A fraud involving an quantity of ten crore of rupees and above could also be thought of severe and be tried within the Particular Court docket.

The Twenty-ninth Report of the Regulation Fee had dealt some classes of crimes considered one of which is “offences calculated to forestall and impede the financial growth of the nation and endanger its financial well being.” Offences referring to Banking Fraud will fall beneath this class. An important function of such offences is that ordinarily they don’t contain a person direct sufferer. They’re punishable as a result of they hurt the entire society. It’s clear that cash concerned in Financial institution belongs to public. They deposit there entire life’ safety in Banks and in case of Dacoity or Theft in banks the general public shall be al misplaced. Thus it is necessary that adequate efforts needs to be taken on this regard.

There exists a brand new sort of menace in cyber world. Writers are referring it as “Salami Assault” beneath this a particular software program is used for transferring the quantity from the account of the person. Therefore the culprits of such crimes needs to be discovered shortly and needs to be given strict punishment. Furthermore there may be requirement of extra variety of IT professionals who will assist in discovering an answer towards all these safety threats.

read more :