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Law and Policy Relating to Bank Fraud and its Prevention and Control 

Tauseef Ahmad
Ph.D. Research Scholar
Faculty of Law Jamia Millia Islamia, Delhi, India

Volume II – Issue III, 2019

Banking fraud is a critical issue before the Country. But the pace of development for an effective mechanism to fight it is negligible. Banking frauds affect the modern quality of life and imposes a detrimental effect on the national growth. A number of strategies can be developed by both the Reserve Bank of India and Government of India to curb the menace of Banking Frauds. However, these strategies can only be effective if they strengthen the development of a more effective banking system in fact, within the banking system fraud is one of the areas which need immediate urgent attention. Indian Penal Code, 1860 does not recognize Banking Fraud as a separate offence. Different provisions of the Indian Penal Code, 1860 are attracted depending upon the facts of each case of Banking Frauds. This shows that till now, there is no independent legislation to deal with Banking Frauds exclusively and comprehensively. In general, Banking Frauds constitute white collar crime committed by unscrupulous persons smartly taking undue advantage of loopholes existing in the current banking system as well as in procedure. In the absence of independent legislation to address Banking Fraud, the umbrella penal legislation in India i.e. the Indian Penal Code provides diverse provisions to redress this conspicuous issue. It is crystal clear that Banking Fraud is an activity which is a combination of various elements of civil and criminal ingredient, which adversely affect the interest of public, public money and state exchequer. Keeping in view the above stated the paper is an attempt to highlight the law and policy regarding bank fraud. The author will prove scientifically with some cases that there is existing legislative gap which need to be filled. At the end of paper certain suggestions are provided as well.


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