Vulnerability of Banking Institutions in India to Frauds – Academic, Regulatory and Customer Perspectives

The central focus of this paper is a questionnaire survey conducted in order to understand the perception of professionals (bankers and non-bankers) with regard to how vulnerable are banks in India with respect to being open to frauds. After an analysis of the literature available on the subject, it looks at the various suggestions and recommendations made by the Reserve Bank of India (RBI) and Expert Committees on fraudulent practices in banks and methods for their prevention. It concludes by pulling together the three perspectives (academic, regulatory and the customer) and shows that there is a high degree of congruence in what the three perspectives bring to the table with regard to the areas where attention has to be focused by banks in order to be less prone to frauds being perpetrated on them. This congruence should also make matters easier for the regulators in framing preventive guidelines for frauds.