Frauds in banking sector

Abstract

Dr K. C. Chakrabarty, former Deputy Governor of the RBI in his address on “Frauds in the Banking Sector: Causes, Concerns and Cures” defined fraud as “any behaviour by which one person intends to gain a dishonest advantage over another”. Recently, Shri R. Gandhi, the current Deputy Governor of the RBI, during his address on financial frauds defined fraud as “a generic term embracing all the multifarious means which human ingenuity can devise and are resorted to by one individual to gain an advantage over another by false suggestions or by suppression of the truth”. As per Section 25 of the Indian Penal Code (IPC) “A person is said to do a thing fraudulently if he does that thing with intent to defraud but not otherwise”. In the report on “RBI Working Group on Information Security, Electronic Banking, Technology Risk Management and Cyber Frauds”, a fraud has been defined as: “A deliberate act of omission or commission by any person, carried out in the course of a banking transaction or in the books of accounts maintained manually or under computer system in banks, resulting into wrongful gain to any person for a temporary period or otherwise, with or without any monetary loss to the bank”. Based on the above, we can define fraud as any activity done with the intention to gain an unfair advantage by indulging in misrepresentation of facts and figures.