The IUP Journal of Law Review
Mitigating the Menace of Banking Frauds in India Using Innovation and Technology

Article Details
Pub. Date : Oct 2021
Product Name : The IUP Journal of Law Review
Product Type : Article
Product Code : IJLR21021
Author Name : Kanika Tyagi
Availability : YES
Subject/Domain : Arts & Humanities
Download Format : PDF Format
No. of Pages : 13



Banking institutions are iron horses of our country that propel financial sector operations, money market, and economic prosperity. In recent years, although the banking sector has completely gone for an overhaul, the loss caused due to frauds is still rising. Fraud losses can be reduced by banks by using advanced technology and analytics. Customers should be educated about fraud prevention, laws should be applied more strictly, data analysis technologies should be used, fraud mitigation best practices should be followed, and multipoint scrutiny should be used. In 2015, the Reserve Bank of India created new methods for banks to combat loan fraud by taking proactive measures such as establishing a Central Fraud Registry and introducing notion of a Red-Flagged Account, and Indian investigative agencies will soon begin sharing their information with banks. Even though banks are not completely safe from unforeseen threats, they can be more secure. This paper critically analyzes the legal challenges that the banking institutions are facing with respect to bank frauds and the impact of technology on the fight against the menace.


An effective and good banking system is commonly recognized as essential for the free-flowing operations of a capital market and a country's economic progress. India's banking industry has come a long way to reach its current status. The Indian banking business has gone through the following three stages since independence: character-based lending, ideology-based lending, and competitiveness-based lending.1 The Indian banking industry employs 1,175,149 people and operates 109,811 branches in India (plus 171 abroad), with a total deposit of 67,504.54 bn and bank credit of 52,604.59 bn.2 Although Public Sector Banks (PSBs) have a 75% market share, private sector banks have five times the number of funds as PSBs. The exponentialdevelopment and diversity of industry, as well as large-scale computerization and networking, have all raised the operational risks that banks face. Unfortunately, the banking business is subject to a variety of frauds and scams.