In the new millennium, the Indian banking industry has become extremely competitive and introduced several new financial services. The phenomenal spread of branches, growth and diversification in business, and large-scale computerization and networking have collectively increased the operational risks manifold. Fraud is a major component of operational risk. With the rising banking business, frauds in banks are also increasing and fraudsters are becoming more sophisticated and ingenious. But if the banker is upright and knows his/her job well, the task of the defrauder will become extremely difficult, if not impossible. This has thrust enormous responsibilities on banks in terms of prescribing and maintaining an effective architecture of internal checks and controls.
Cheques are widely used instruments across the globe. It is interesting to note that cheques as a payment mechanism are still having a dominant position, both in developed and developing countries. In India, the number of cheques that passed through the clearing houses during 2004-05 was 1124.6 million for a total sum of Rs. 1,10,47,052 cr. Further, majority of clearing houses and banks are using Magnetic Ink Character Recognition (MICR) cheques. They are clearing on an average about 10,157 lakhs of cheques per year, and if we include the cheques used for drawing cash and for transfer of funds, we can safely assume that nearly ten billion cheques are being issued in a year. |
