Professional Documents
Culture Documents
Banking System
What is banking?
While walking on the streets of any town or city you
might have seen some signboard on buildings with names –
Canara bank, Punjab national bank, State bank of India,
Commercial bank, etc. what do these names stand for?
Did you ever try to know about them? If you ever enter such
building you will find some kind of a business office. You will
see some employees sitting behind counters dealing with
visitors standing in front of them you will find that some are
depositing money at one counter while some are receiving
money at other counter behind the counters of office you will
see tables and chairs occupied by officers. On one side of
the office you will also see a chamber (small partitioned
room) where the manager is sitting with papers on his tables
this is office of a ‘bank’.
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Banking System Frauds And Legal Control
DEFINATION OF BANKING
TYPES OF BANKS
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Bank of Issue
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Banker to Government
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not only the banker's bank but also the lender of the last
resort.
Controller of Credit
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of India Act of 1934, the Bank was required to buy and sell
at fixed rates any amount of sterling in lots of not less than
Rs. 10,000. The rate of exchange fixed was Re. 1 = sh. 6d.
Since 1935 the Bank was able to maintain the exchange rate
fixed at lsh.6d. Though there were periods of extreme
pressure in favor of or against
The rupee. After India became a member of the
International Monetary Fund in 1946, the Reserve Bank has
the responsibility of maintaining fixed exchange rates with
all other member countries of the I.M.F.
Besides maintaining the rate of exchange of the rupee, the
Reserve Bank has to act as the custodian of India's reserve
of international currencies. The vast sterling balances were
acquired and managed by the Bank. Further, the RBI has
the responsibility of administering the exchange controls of
the country.
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Supervisory functions
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Promotional functions
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route its short term credit to agriculture. The RBI has set up
the Agricultural Refinance and Development Corporation to
provide long-term finance to farmers.
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ATM
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Provided that in both (a) and (b) all funds, bank accounts
and properties acquired using such funds subjected to the
financial fraud as may reasonably be attributed by the
investigating agency shall be recovered and restored to the
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till the beginning of 1990s, has been pushed into the choppy
waters of intense competition.
A sound banking system should possess three basic
characteristics to protect depositor's interest and public
faith. Theses are (i) a fraud free culture,
(ii) A time tested Best Practice Code, and
(iii) An in house immediate grievance remedial system.
All these conditions are their missing or extremely weak in
India. Section 5(b) of the Banking Regulation Act, 1949
defines banking... "Banking is the accepting for the purpose
of lending or investment, deposits of money for 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 if his money has
fraudulently been drawn from the bank the latter is under
strict obligation to pay the depositor. The bank therefore has
to ensure at all times that the money of the depositors is not
drawn fraudulently. Time has come when the security
aspects of the banks have 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
contains a discussion on the rise of banking frauds and
various methods 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 course of banking
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DEFINITION OF FRAUD
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BANK FRAUDS
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Bank frauds are the failure of the banker. It does not mean
that the external frauds do not defraud banks. But if the
banker is upright and knows his job, the task of defrauder
will become extremely difficult, if not possible.
Detection of Frauds
Despite all care and vigilance there may still be some frauds,
though their number, periodicity and intensity may be
considerably reduced. The following procedure would be
very helpful if taken into consideration:
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Types of Fraud
• Electronic Fraud
• Identity Fraud
• Spy ware and Ad ware
• Debit/Credit Card Fraud
ELECTRONIC FRAUD
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IDENTITY FRAUD
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• Your address
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Credit card and debit card fraud is a crime where your credit
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Credit or debit card fraud can also occur when your card is
lost or stolen and used by fraudster to purchase goods or
remove cash from ATMs or other locations.
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BREACH OF TRUST
1. Section 408- Criminal breach of trust by clerk or
servant.
2. Section 409- Criminal breach of trust by public servant,
or by banker, merchant or agent.
3. Section 416- Cheating by personating
4. Section 419- Punishment for cheating by personating.
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Section 58
When an Instrument is obtained by unlawful means or for
unlawful consideration no possessor or indorse who claims
through the person who found or so obtained the instrument
is entitled to receive the amount due thereon from such
maker, acceptor or holder, or from any party prior to such
holder, unless such possessor or indorse is, or some person
through whom he claims was, a holder thereof in due
course.
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Section 85:
Cheque payable to order.
1. By this section, bankers are placed in privileged position.
It provides that if an order cheque is indorsed by or on
behalf of the payee, and the banker on whom it is drawn
pays it in due course, the banker is discharged. He can debit
his customer with the amount so paid, though the
endorsement of the payee might turn out to be a forgery.
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Banking legislation
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The name;
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Execution of Documents
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CONCLUSION
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PRESS RELEASE
Seminar on Strategies for Prevention of Frauds in Banks and
Money Laundering
“Banks in India should take proactive steps to implement
strategies for preventing frauds in Banks and money
laundering” said Shri M S Sundara Rajan, Chairman and
Managing
Director, Indian Bank. Inaugurating a one day seminar on
“Strategies for Prevention of
Frauds in Banks and Money Laundering” at IMAGE, Chennai
today, Shri Sundara Rajan
Said that the quantum of frauds in India was nearly to the
tune of Rs.400 crores in 2002
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