Banking Fraud is posing threat to Indian Economy. Its vibrant impact may be understood be the truth that within the 12 months 2004 number of Cyber Crime were 347 in India which rose to 481 in 2005 showing a rise of 38.5% while I.P.C. class crime stood at 302 in 2005 together with 186 cases of cyber fraud and sixty eight cases cyber forgery. Thus it turns into essential that incidence of such frauds must be minimized. More upsetting is the fact that such frauds are getting into in Banking Sector as well.
Within the current day, Global State of affairs Banking System has acquired new dimensions. Banking did spread in India. Immediately, the banking system has entered into aggressive markets in areas covering resource mobilization, human resource development, buyer services and credit administration as well.
Indian’s banking system has a number of excellent achievements to its credit, essentially the most putting of which is its reach. Actually, Indian banks are actually spread out into the remotest areas of our country. Indian banking, which was working in a highly consolationable and guarded surroundings until the beginning of Nineteen Nineties, has been pushed into the choppy waters of intense competition.
A sound banking system ought to possess three primary traits to guard depositor’s curiosity and public faith. Theses are (i) a fraud free tradition, (ii) a time tested Best Practice Code, and (iii) an in house rapid grievance remedial system. All these conditions are their lacking or extremely 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 money from the purpose of lending or investment, deposits of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise.” But when his cash has fraudulently been drawn from the bank the latter is below strict obligation to pay the depositor. The bank subsequently has to ensure at all times that the cash of the depositors just isn’t drawn fraudulently. Time has come when the safety points of the banks need to be dealt with on priority basis.
The banking system in our country has been taking care of all segments of our socio-economic set up. The Article accommodates a discussion on the rise of banking frauds and numerous strategies that can be used to avoid such frauds. A bank fraud is a deliberate act of omission or commission by any person carried out in the middle of banking transactions or in the books of accounts, leading to wrongful gain to any individual for a temporary period or otherwise, with or with none monetary loss to the bank. The related provisions of Indian Penal Code, Felony Process Code, Indian Contract Act, and Negotiable Instruments Act relating to banking frauds has been cited in the current Article.
EVOLUTION OF BANKING SYSTEM IN INDIA
Banking system occupies an necessary place in a nation’s economy. A banking establishment is indispensable in a modern society. It performs a pivotal position in financial development of a country and types the core of the money market in an advanced country.
Banking trade in India has traversed a protracted approach to assume its present stature. It has undergone a major structural transformation after the nationalization of 14 major commercial banks in 1969 and 6 more on 15 April 1980. The Indian banking system is exclusive and perhaps has no parallels in the banking history of any country in the world.
RESERVE BANK OF INDIA-ECONOMIC AND SOCIAL OBJECTIVE
The Reserve Bank of India has an vital role to play in the upkeep of the change value of the rupee in view of the close interdependence of international trade and national economic progress and well being. This aspect is of the wider responsibly of the central bank for the maintenance of financial and financial stability. For this the bank is entrusted with the custody and the administration of country’s worldwide reserves; it acts also as the agent of the government in respect of India’s membership of the international monetary fund. With financial development the bank additionally performs a wide range of developmental and promotional features which previously have been registered being outside the traditional purview of central banking. It also acts an necessary regulator.
BANK FRAUDS: CONCEPT AND DIMENSIONS
Banks are the engines that drive the operations within the monetary sector, which is important for the economy. With the nationalization of banks in 1969, additionally they have emerged as engines for social change. After Independence, the banks have passed by three stages. They have moved from the character based lending to ideology primarily based lending to right this moment competitiveness based mostly lending in the context of India’s financial liberalization policies and the process of linking with the global economy.
While the operations of the bank have turn into more and more significant banking frauds in banks are also increasing and fraudsters are becoming more and more sophisticated and ingenious. In a bid to maintain tempo with the altering times, the banking sector has diversified it business manifold. And the old philosophy of sophistication banking has been replaced by mass banking. The problem in administration of social responsibility with economic viability has increased.
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