Frauds in the Indian Banking Industry: Concerns and Cures

Abstract

The Indian banking sector has experienced considerable growth and changes since liberalisation of
economy in 1991. Though the banking industry is generally well regulated and supervised, the sector
suffers from its own set of challenges when it comes to ethical practices, financial distress and
corporate governance. This study endeavour to cover issues such as banking frauds and mounting
credit card debt, with a detailed analysis using secondary data (literature review and case approach)
as well as an interview-based approach, spanning across all players involved in reporting financial
misconduct. The report touches upon the case of rising NPAs in the past few years across various
scheduled commercial banks, especially public-sector banks. The study finally proposes some
recommendations to reduce future occurrence of frauds in Indian banking sector. The credibility of
third parties such as auditing firms and credit rating agencies is also questioned in the study and is
believed to be a significant contributor amongst other causes, such as oversight by banks and
inadequate diligence.

KEYWORDS: Non-performing assets, Stressed assets, Banking frauds, Financial Misconduct