Role of Reserve Bank of India for Banking Reforms in India

As the Indian Banking is undergoing a transition, the reform measures have brought about sweeping changes. In this background, the broad objective of the financial sector reform is to create a viable and efficient banking system. Fraud has been acknowledged as one of the principal threat to the development of the banking sector worldwide. This paper examines the fraud and its prevention in the Indian banking sector. Data used for this paper were obtained from primary source, through the administration of literature review. RBI Guidelines on frauds insists, among others, that banks are required to introduce necessary safeguards / preventive measures by way of appropriate procedures and internal checks so as to prevent/minimize occurrence of frauds and resultant financial loss to the banks. Banks are the engines that drive the operations in the financial sector, which is vital for the economy. With the nationalization of banks in 1969, they also have emerged as engines for social change and have become indispensable in a modern society. Banks play a critical role in economic development of a nation. The increase in banking operations is now accompanied by an increase in frauds in the banking sector. An attempt has been made in this paper to provide a brief overview on performance of the Banking Sector in India against the frauds prevailing in the contemporary period with the help of availability of preventive measure that can help to prevent the frauds.