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A Study of Banking Fraud and it’s

preventive measures
Content of presentaion
HYPOTHESES

ABSTRACT
INTRODUCTION
OBJECTIVES
CAUSES AND IMPACT
RECOMMENDATIONS
CONCLUSION
BIBLIOGRAPHY
ABSTRACT
Banks are the engine that drive operations in the financial sector. With the rapidly growth of
banking industry, frauds in banks are also increasing very fast, and fraudsters have started using
innovative ideas. Internal audit professionals should pay an integral role in there organizations
fraud fighting efforts. This research studies the causes and impact of frauds from the perspective
of banking industry. It also recommends the measures to prevent the frauds.
KEYWORDS: Bank Frauds, Internal Audit, Causes and Impact of Frauds, Preventive measures.
INTRODUCTION
 Banking frauds constitute conscious misrepresentation obtaining possession money or other property
which is owned or held by a financial institution or depositors by using those means which are against the
law.
Bank fraud keeps the management of banks alert and cause them to waste resources and energies on
fraud prevention and detection
RBI has been circulating to banks, the details frauds of an ingenious nature not reported earlier so that
banks could introduce necessary safeguards by way of appropriate procedure and internal check
Research methodology
 Research design: The research design employed in this study was a descriptive research in
form of a survey, interview and questionnaire
Sample size: the sample size will be focused on 20 respondents within the given area
Data collection methods: the data is collected by interview and questionnaire
Data analysis: data analysis was carried out in order to inspect, clean, transform and model
data with the aim of identifying and highlighting useful information that can used to support the
decision making process
OBJECTIVE
To study the cause and
impact of frauds on
banking sector

To recommend preventive
measures to control the
frauds in the banking sector
Cause and effect of bank fraud
Cause of frauds
Fraudulent documentation involves altering, changing or modifying a document to deceive the bank.
Advanced related fraud like diversion of funds, overvaluation or absence of requisite co-laterals.
Technological related fraud involve hacking ,phishing, pharming and smishing.
The frauds and for Forgery involve professional workers who are thoroughly conversant with the banking systems and
procedures and who seeks to enlist the support and cooperation of the dishonest member of the bank staff.

Effects of frauds
Erodes public confidence banking systems
Diminishing the profitability of bank and thus reduces firm value.
Depletion of stakeholder and bank capital base
 Dismissal and retrenchment of staff
Recommendation
Account holders review Rbi guidelines

Proper verification of document CMD/CEOs of banks must provide focus on the


fraud prevention and management functions to
enable effective investigation of frauds

multi-layer security structure The fraud risk management fraud monitoring and
fraud investigation function must be owned by
banks CEOs

Strict supervision of RBI Bank with approval of their respective board shall
frame internal policy for fraud risk management
and fraud investigation based on the governance
standard
SUGGESTION

Eternal vigilance of the bank as well as customer


Monetary system and RBI Should be out of the political pressure
There is proper functioning of bank internal of verification of document at the
time of approving loan bank should follow strict guideline of RBI before
disbursing loan
There is proper functioning of bank internal of verification of document at the
time of approving loan bank should follow strict guideline of RBI before
disbursing loan
Bank security level must be improved for net banking like ATM, debit and credit
card

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