"Frauds in Indian Banking Sector": A Project Report ON

A
PROJECT REPORT
ON
“FRAUDS IN INDIAN BANKING SECTOR”
BACHELOR OF COMMERCE IN BANKING AND INSURANCE
(SEMESTER V)
Under the Guidance of
PROF. AARTI LULLA
Submitted
In Partial Fulfillment of the requirement for the Award of the degree

of Bachelor of commerce in Banking and insurance
Submitted by,
MAHESH ASHOK NASNE
ROLL NO. 1728030
SHRI SIDH THAKURNATH COLLEGE OF ARTS & COMMERCE
ULHASNAGAR – 421 004
UNIVERSITY OF MUMBAI 2017-2018

DECLARATION
I, MAHESH ASHOK NASNE student of TYBCBI (Bachelor of

Commerce in Banking and Insurance Management) hereby declare that
I have completed the Project on “FRAUDS IN INDIAN BANKING
SECTOR” in the academic year 2017-18.
The information submitted is true and original to the best of my
knowledge.
MAHESH A NASNE.
{T.Y.BBI}
ACKNOWLEDGEMENT
My project is a result of the inspiring and thoughtful guidance and supervision of

my project guide PROF. AARTI LULLA I am deeply indebted to her whose help, time,
support, inspiration, stimulating suggestions and encouragement helped me in all the
times of research and writing of this report.
This project has widened my horizon to various areas under general knowledge
regarding the practical and real aspects of “FRAUDS IN INDIAN BANKING
SECTOR".
I whole heartedly thank all the concerned people at college as well as at university
level, who have given me the chance for preparing this valuable project.
I would further like to thanks our Principal Sir Dr. J.C. Purswani for giving me
an opportunity to complete our Project
Last but not least, this Project has definitely helped me to achieve something which will
be useful to us in near future and hence I am thankful to all persons who have helped in
knowledge.
EXECUTIVE SUMMARY
The project scans the risky nature of banking with reference to various
Types of transactions and their vulnerability to fraud. Prevention is better than
Cure.
In bank administration, one feels that not much attention is paid to
Preventive measures. Bank managements must direct their orientation towards
Preventive rather than detective or punitive measures. Preventive vigilance must
Be the prime agenda to bring down the occurrence of fraud in banks.
Bankers must be properly educated and trained on the effect and
Consequences of dilution and distortion of the prescribed norms.
Retention and deployment of experienced and specialized staff in the respective
fields of operation will minimize fraud. Bankers have to overcome the inertia
that prevents them from learning new and effective technology.
Besides, the pressure of customers and their demands are increasing in
the post-VRS scene prevailing in banks. There is comparatively less staff to do
the increased quantum of business. More work load means neglecting
systematic adherence to procedure in the routine transactions.
Motivating the staff in the lower rung by proper promotional processes
will help. A rational HRD policy has to be evolved to meet the pressing
demands of customers.
Are the Bankers concentrating on the preventive front of checking the
frauds in banking or is the traditional approach still used.
The Application of IT in Banking Frauds, and presence of banking frauds
in the finance industry and their correlation, is it an essential element of
Preventive measures to be adopted by the Banker

Means and Modes of Frauds and RBI’s Guidelines for the detection and
registration of the same and their dynamics should be made familiar to the
employees of a Bank so as to bring about awareness and at the same time create
vigilance amongst the employees, so as to equip them with the resources
required to deal with such frauds, as and when they happen.
The Major Banking Frauds that were bought into the limelight by the
authorities and other relevant departments, which saw banking frauds, and
revealed the loop holes in the already laid down strategy to deal with the frauds
should be made familiar to the public at large and the bankers at the same time
INDEX
SR. TOPIC NAME PAGE

NO. NO.
1. INTRODUCTION 1-3
2. BANK FRAUDS 4-5
3 REASONS OF BANK FRAUDS 6
4. MECHANICS OF BANK FRAUDS 7-18
5. FRAUDS PREVENTION AND DETECTION 19-29
6. RELEVANT MEASURE TO TACKLE BANK FRAUDS IN 30-33

INDIA
7. SEURITY IN BANKING SYSTEM 34-35
8. CUSTOMER GUIDELINES TO AVIOD FRAUDS 36
9. BANK FRAUDS STATISTICS IN INDIA 37-38
10 EMERGING FRAUDS RISKS 39
11 BANKING FRAUDS, IPC & FRAUD 40-56

PREVENTION
12 TYPE OF FRAUD 57-60
I ANNEXTURE
A QUESTIONNAIRE
B CONCLUSION
C BIBLOGRAPHY

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A

“FRAUDS IN INDIAN BANKING SECTOR”

BACHELOR OF COMMERCE IN BANKING AND INSURANCE

Under the Guidance of

PROF. AARTI LULLA

In Partial Fulfillment of the requirement for the Award of the degree

MAHESH ASHOK NASNE

ROLL NO. 1728030

SHRI SIDH THAKURNATH COLLEGE OF ARTS & COMMERCE

ULHASNAGAR – 421 004

UNIVERSITY OF MUMBAI 2017-2018

I, MAHESH ASHOK NASNE student of TYBCBI (Bachelor of

My project is a result of the inspiring and thoughtful guidance and supervision of

Types of transactions and their vulnerability to fraud. Prevention is better than

In bank administration, one feels that not much attention is paid to

Preventive measures. Bank managements must direct their orientation towards

Preventive rather than detective or punitive measures. Preventive vigilance must

Be the prime agenda to bring down the occurrence of fraud in banks.

Bankers must be properly educated and trained on the effect and

Consequences of dilution and distortion of the prescribed norms.

Retention and deployment of experienced and specialized staff in the respective

that prevents them from learning new and effective technology.

Besides, the pressure of customers and their demands are increasing in

the post-VRS scene prevailing in banks. There is comparatively less staff to do

the increased quantum of business. More work load means neglecting

systematic adherence to procedure in the routine transactions.

Motivating the staff in the lower rung by proper promotional processes

frauds in banking or is the traditional approach still used.

The Application of IT in Banking Frauds, and presence of banking frauds

in the finance industry and their correlation, is it an essential element of

Preventive measures to be adopted by the Banker

vigilance amongst the employees, so as to equip them with the resources

required to deal with such frauds, as and when they happen.

SR. TOPIC NAME PAGE

2. BANK FRAUDS 4-5

3 REASONS OF BANK FRAUDS 6

4. MECHANICS OF BANK FRAUDS 7-18

5. FRAUDS PREVENTION AND DETECTION 19-29

6. RELEVANT MEASURE TO TACKLE BANK FRAUDS IN 30-33

8. CUSTOMER GUIDELINES TO AVIOD FRAUDS 36

9. BANK FRAUDS STATISTICS IN INDIA 37-38

10 EMERGING FRAUDS RISKS 39

11 BANKING FRAUDS, IPC & FRAUD 40-56

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