BANK FRAUDS: AN EMPIRICAL ANALYSIS ON THE NEED FOR A ROBUST LEGAL MECHANISM

Abstract

Bank frauds in the public sector banks in India is increasing every year. According to the Annual Report of the RBI bank frauds increased from 27% in 2017-18 to 41% in 2019 – 20.  In 2020 - 2021 the Loan Portfolio saw 47.5% of the Frauds in terms of number and 99 % in terms of amount involved. The existing legal regulations fail to deliver the optimum results in controlling bank frauds primarily because there is no specific legislation instead there are a plethora of legislations to criminalize the frauds. In this Paper, an empirical analysis is made to study on the need for having a specific legislation on Bank Frauds. While examining the results it was identified that strengthening RBI Regulatory compliance mechanisms in the Banks, increasing the supervisory powers of the RBI under the Banking Regulation Act, giving enhanced punishment to provide enough deterrence, establishment of specialized court and investigation agency etc., shall help mitigate frauds in Banks. To manage Frauds in Banks, there is a need for comprehensive legal regulations. Curbing bank frauds needs an efficient enforcement agency and strong legislation. The need of the hour is to come up with legal regulations that can identify the banking frauds and punish fraudulent activities with a deterrent effect.