Factors impacting banking frauds in India: a conceptual framework

The Indian banking sector has witnessed exponential growth and changes since liberalisation of economy in 1990-1991. Reserve Bank of India is the chief regulator of the banking sector and has done a reasonable work in close supervision. Never ending banking frauds pose a serious challenge to the government, with banking sector also the regulator. Growing challenges also fall in the realm of ethical practices, financial distress and corporate governance. This study looked at the cases of bank frauds listed by Central Vigilance Commission, in order to understand the underlying issues in frauds in various sectors, different banking instruments used to commit frauds and the regulatory lapses in the banking sector. A detailed analysis was done by using secondary data (literature review and case approach) as well as an interview-based approach, spanning across all players involved in reporting, regulating and dealing indirectly or directly in the financial misconduct. The analysis acts as an anchor to study the components of frauds and define the role of regulators in the whole game plan. The study finally proposes some recommendations to reduce future occurrence of frauds in Indian banking sector.