Fraud is any dishonest act and behavior by which one person gains or intends to realize advantage over another person. Fraud causes loss to the victim directly or indirectly. Fraud has not been described or discussed clearly within the Indian legal code but sections handling cheating. concealment, forgery counterfeiting and breach of trust has been discusses which results in the act of fraud.

In Contractual term as described within the Indian Contract Act, Sec 17 suggests that a fraud means and includes any of the acts by a celebration to a contract or with his connivance or by his agents with the intention to deceive another party or his agent or to induce him to enter in to a contract.

Banking Frauds constitute a considerable percentage of white-collar offences being probed by the police. Unlike ordinary thefts and robberies, the quantity misappropriated in these crimes runs into lakhs and crores of rupees. Bank fraud may be a federal crime in many countries, defined as getting to obtain property or money from any federally insured financial organization . It is sometimes considered a white collar crime.

The number of bank frauds in India is substantial. It in increasing with the passage of time. All the main operational areas in banking represent an honest opportunity for fraudsters with growing incidence being reported under deposit, loan and inter-branch accounting transactions, including remittances.

Bank fraud may be a business in today’s world. With more educational qualifications, banking becoming impersonal and increase in banking sector have gave rise to the present white collar crime. In a survey made till 1997 bank frauds in nationalised banks was of Rs.497.60 crore.

The banking fraud can be classified as:

  • Fraud by insiders
  • Fraud by others

Fraud by insiders

There is an insider risk to consider anytime employees have access to accounting systems. Whether it’s an accounts payable department or a team in charge of approving loan applications, employees have access to corporate payment methods and have the authority to issue funds or access client accounts.

The most common types of insider fraud that exist in this environment include account takeover and issuing payments, loans, or contracts to accounts the insider or their accomplices control.

Client data and accounts

Employees with access to client data and accounts have a unique opportunity to use this data to commit crimes. They might take advantage of their position to divert funds, run a money laundering scheme, or collude with external threats to sell client account credentials.

Call centers and high transaction volumes

Call centers, fulfillment centers, and other environments where a high transaction volume can be expected create additional risks. Industries like financial services and e-commerce are particularly vulnerable.

Mistakes and negligence are more likely to happen due to the high volume of transactions, and insiders are more likely to get away with committing fraud if they work in a busy department.

Risks include sharing customer information, approving fraudulent applications, solving problems in unethical ways, or leaking data.


Fraud By Others

Forgery and altered cheques

Thieves have altered cheques to change the name (in order to deposit cheques intended for payment to someone else) or the amount on the face of a cheque (a few strokes of a pen can change 100.00 into 100,000.00, although such an outsized figure may raise some eyebrows).

Instead of tampering with a real cheque, some fraudsters will attempt to forge a depositor’s signature on a blank cheque or even print their own cheques drawn on accounts owned by others, non-existent accounts or maybe alleged accounts owned by non-existent depositors. The cheque will then be deposited to a different bank and therefore the money withdrawn before the cheque are often returned as invalid or for non-sufficient funds.

Stolen cheques

Some fraudsters obtain access to facilities handling large amounts of cheques, like a mailroom or post office or the offices of a tax authority (receiving many cheques) or a corporate payroll or a social or veterans’ benefit office (issuing many cheques). A few cheques go missing; accounts are then opened under assumed names and therefore the cheques (often tampered or altered in some way) deposited in order that the cash can then be withdrawn by thieves. Stolen blank check books also are useful to forgers who then sign as if they were the depositor.

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