Banking Essay

3877 Words Aug 11th, 2012 16 Pages
Bank Frauds
“Lapses in system make easy the job of offenders to dupe banks”
Fraud is any dishonest act and behaviour by which one person gains or intends to gain advantage over another person. Fraud causes loss to the victim directly or indirectly.
Fraud has not been described or discussed clearly in The Indian Penal Code but sections dealing with cheating. concealment, forgery counterfeiting and breach of trust has been discusses which leads to the act of fraud.
In Contractual term as described in the Indian Contract Act, Sec 17 suggests that a fraud means and includes any of the acts by a party 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
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Unfortunately, when one investment loss is piled onto another, the costs to the bank can reach into the hundreds of millions of rupees; there have even been cases in which a bank goes out of business due to market investment losses.

Fraudulent loans
One way to remove money from a bank is to take out a loan, a practice bankers would be more than willing to encourage if they know that the money will be repaid in full with interest. A fraudulent loan, however, is one in which the borrower is a business entity controlled by a dishonest bank officer or an accomplice; the "borrower" then declares bankruptcy or vanishes and the money is gone. The borrower may even be a nonexistent entity and the loan merely an artifice to conceal a theft of a large sum of money from the bank.
Wire fraud
Wire transfer networks such as the international, interbank fund transfer system are tempting as targets as a transfer, once made, is difficult or impossible to reverse. As these networks are used by banks to settle accounts with each other, rapid or overnight wire transfer of large amounts of money are commonplace; while banks have put checks and balances in place, there is the risk that insiders may attempt to use

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