Menace of Frauds in the Indian Banking Industry : An Empirical Study

Banks are the engines that drive the operations in the financial sector and growth of an economy. With the growing banking industry in India, frauds in Banks are also increasing and fraudsters are becoming more sophisticated and ingenious. While it is not possible for Banks to operate in a zero fraud environment, proactive steps such as conducting risk assessments of procedures and policies can help them hedge their risk of contingent losses due to fraud. Thus, time has come when the security aspects of the Banks have to be dealt with on a priority basis. 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." This study reveals that "there are poor employment practices and lack of effective employee training; usually over-burdened staff, weak internal control systems, and low compliance levels on the part of Bank Managers, Offices and Clerks." However, technology can play a major part in combating new-age frauds: proactive forensic data analysis and data mining techniques can help governments, regulatory bodies and Banks to counter the increasingly complex nature of frauds