Volume 4 / Issue 3 / Pages 1-21 - Papers in the same Issue

A study to investigate the reasons for bank frauds and the implementation of preventive security controls in Indian banking industry

Khanna, A., & Arora, B.

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This paper examines the issue of frauds from the perspective of banking industry. The study seeks to evaluate the various causes that are responsible for banks frauds. It aims to examine the extent to which bank employees follow the various fraud prevention measures including the ones prescribed by Reserve Bank of India. It aims to give an insight on the perception of bank employees towards preventive mechanism and their awareness towards various frauds. The study signifies the importance of training in prevention of bank frauds. A strong system of internal control and good employment practices prevent frauds and mitigate losses. The research reveals that implementation of various internal control mechanisms are not up to the mark. The results indicate that lack of training, overburdened staff, competition, low compliance level (the degree to which procedures and prudential practices framed by Reserve bank of India to prevent frauds are followed) are the main reasons for bank frauds. The banks should take the rising graph of bank frauds seriously and need to ensure that there is no laxity in internal control mechanism.

Keywords: bank frauds, preventive measures, internal control, compliance, and security controls

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