Banking Fraud - Prevention and Control

Banking Fraud is posing threat to Indian Economy. Its vibrant effect can be understood be the fact that in the year 2004 number of Cyber Crime were 347 in India which rose to 481 in 2005 showing an increase of 38.5% while I.P.C. category crime stood at 302 in 2005 including 186 cases of cyber fraud and 68 cases cyber forgery. Thus it becomes very important that occurrence of such frauds should be minimized. More upsetting is the fact that such frauds are entering in Banking Sector as well.
In the present day, Global Scenario Banking System has acquired new dimensions. Banking did spread in India. Today, the banking system has entered into competitive markets in areas covering resource mobilization, human resource development, customer services and credit management as well.
Indian's banking system has several outstanding achievements to its credit, the most striking of which is its reach. In fact, Indian banks are now spread out into the remotest areas of our country. Indian banking, which was operating in a highly comfortable and protected environment till the beginning of 1990s, has been pushed into the choppy waters of intense competition.
A sound banking system should possess three basic characteristics to protect depositor's interest and public faith. Theses are (i) a fraud free culture, (ii) a time tested Best Practice Code, and (iii) an in house immediate grievance remedial system. All these conditions are their missing or extremely weak in India. Section 5(b) of the Banking Regulation Act, 1949 defines banking... "Banking is the accepting for the purpose of lending or investment, deposits of money from the purpose of lending or investment, deposits of money from the public, repayable on demand or otherwise and withdraw able by cheque, draft, order or otherwise." But if his money has fraudulently been drawn from the bank the latter is under strict obligation to pay the depositor. The bank therefore has to ensure at all times that the money of the depositors is not drawn fraudulently. Time has come when the security aspects of the banks have to be dealt with on priority basis.
The banking system in our country has been taking care of all segments of our socio-economic set up. The Article contains a discussion on the rise of banking frauds and various methods that can be used to avoid such frauds. A bank fraud is a deliberate act of omission or commission by any person carried out in the course of banking transactions or in the books of accounts, resulting in wrongful gain to any person for a temporary period or otherwise, with or without any monetary loss to the bank. The relevant provisions of Indian Penal Code, Criminal Procedure Code, Indian Contract Act, and Negotiable Instruments Act relating to banking frauds has been cited in the present Article.
EVOLUTION OF BANKING SYSTEM IN INDIA
Banking system occupies an important place in a nation's economy. A banking institution is indispensable in a modern society. It plays a pivotal role in economic development of a country and forms the core of the money market in an advanced country.
Banking industry in India has traversed a long way to assume its present stature. It has undergone a major structural transformation after the nationalization of 14 major commercial banks in 1969 and 6 more on 15 April 1980. The Indian banking system is unique and perhaps has no parallels in the banking history of any country in the world.
RESERVE BANK OF INDIA-ECONOMIC AND SOCIAL OBJECTIVE
The Reserve Bank of India has an important role to play in the maintenance of the exchange value of the rupee in view of the close interdependence of international trade and national economic growth and well being. This aspect is of the wider responsibly of the central bank for the maintenance of economic and financial stability. For this the bank is entrusted with the custody and the management of country's international reserves; it acts also as the agent of the government in respect of India's membership of the international monetary fund. With economic development the bank also performs a variety of developmental and promotional functions which in the past were registered being outside the normal purview of central banking. It also acts an important regulator.
BANK FRAUDS: CONCEPT AND DIMENSIONS
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. After Independence, the banks have passed through three stages. They have moved from the character based lending to ideology based lending to today competitiveness based lending in the context of India's economic liberalization policies and the process of linking with the global economy.

While the operations of the bank have become increasingly significant banking frauds in banks are also increasing and fraudsters are becoming more and more sophisticated and ingenious. In a bid to keep pace with the changing times, the banking sector has diversified it business manifold. And the old philosophy of class banking has been replaced by mass banking. The challenge in management of social responsibility with economic viability has increased.

Online Banking Provides Satisfaction and Convenience For Users

With all the attention online banking has received in the last couple of years, it seems there are new online banks popping up everywhere. Users are choosing online banking for its ease and convenience. And while issues of identity theft are important factors to consider with online banking, it has not stopped people from utilizing the Web to streamline their finances.

Even more importantly, recent studies suggest that Internet banking doesn't just make life easier, customers who choose it seem to be more satisfied with their bank. The two areas of greatest satisfaction fall in the categories of the convenience online banking provides and the ability to pay bills online. One recent industry report indicated that satisfaction with online banking services is up 5.5 percent. The report also shows that users who pay their bills online experience not only satisfaction with the ability to bank online, but with their specific banking institution, suggesting users have strong confidence in their bank's ability to secure identity. In fact, similar reports have also shown that those who pay bills online retain their business longer at a particular bank than those who do not use a bank's online service.

As a result, banks are seeing tremendous growth in online service. One major commercial bank cited that in 2004, there were 3.4 million customers paying bills online, followed by an increase to 6 million online bill payers just a year later. Many bankers believe those kinds of increases are the result of services such as online bill pay that customers find most appealing.
Many first-time users come to online banking to access their account information such as account balances and check activity. That is followed by the ability to transfer funds between accounts. And finally, many users then move into online bill pay. Perhaps they start with paying a few utilities online at the utility's website. They may then look into the online bill pay service offered by their bank. Now, banks are seeing more and more users receiving bills electronically.
Yet for some bank customers, concerns about identity theft keep them from trying online banking. Interestingly, their counterparts who do use the Internet to conduct banking do not seem to hold those same perceptions. Most are satisfied with the level of online security offered by their banks. The challenge then for banks lies in the continued education of their customers to try online banking and discover for themselves the high level of security in place at most banks. Once those customers give online banking a try, perceptions of risk seem to decrease, reports indicate. Surprisingly, these same reports discovered that today's security measures put in place by PC users and banks have many ID thieves targeting potential victims offline.
The following are a few tips to consider when choosing an Internet bank account:

1.The Annual Percentage Yield (APR) may be higher with Internet bank accounts, and therefore one of the most important attractions for those looking for a high yield. Conducting transactions online may save the bank money, and those savings may then be passed on to the online customer, most often in the form of higher savings rates.
2.Ability to access money. Online users need to consider what steps are involved in accessing their money in an online account.
3.Ability to link accounts. Users want the ability to link various accounts to one another, making it easy to move money seamlessly between online bank accounts.
4.What types of additional services are available? Potential users should be interested in not only banking online, but purchasing CDs, applying for a mortgage, and paying bills online.
5.Security. Users must confirm that their online bank is FDIC insured and that the security system can be trusted.
6.Ability to set up automatic savings account. There's no reason not to save today with an online account that electronically deposits money into a savings or money market account.

American Momentum Bank is a progressive, Florida based bank that strives to offer a deep understanding of our commercial, retail and http://www.AmericanMomentumBank.com clients' immediate and long-range goals, unparalleled personal service, and solutions tailored to our Clients' specific needs. Experienced, professional management and Associates, combined with flexible decision making, is essential to the success of our Clients. Our banks' success is a result of our Clients' and Associates' success. For more information, please visit http://www.americanmomentumbank.com

Secure and Safe - Tips For Online Banking

Just within the last several years, the Internet has emerged as a highly convenient way to conduct banking business, as well as shop for financial services. As the use of the Internet continues to expand, more banks are using the web to offer products and services or enhance its communication with existing customers.
Howevdr, according to the Federal Deposit Insurance Corporation (FDIC), safe online banking involves making wise choices - decisions that will help users avoid costly surprises or even scams.
Whether selecting a traditional bank or an online bank with no physical office, users should make sure a bank is legitimate and that deposits are federally insured. The following are tips for consumers considering banking over the Internet:
1. Read key information about the bank posted on its Web site. Peruse the "About Us" section on the bank's Web site where a brief history of the bank, its official name, address, and its insurance coverage from the FDIC is featured.
2. Protect yourself from fraudulent Web site. Be careful to avoid copycat Web sites that use a name or Web address similar to, but not the same as, that of a real financial institution. Their intent is to lure potential customers in giving personal information, such as your account number and password. Making sure you have typed the correct Web site address of your bank before conducting a transaction.

3. Verify the bank's insurance status. To verify a bank's insurance status, look for the familiar FDIC logo or the words "Member FDIC" or "FDIC Insured" on the Web site. Internet users may also check the FDIC's online database of FDIC-insured institutions.
4. Due to insurance purposes, a bank may use different names for its online and traditional services. Your deposits at the parent bank are added together with those at the Web site and insured for up to the maximum amount covered for one bank.

5. Only deposits offered by the FDIC-insured institutions are protected by the FDIC. Nondeposit investments and insurance products, such as mutual funds, stocks, annuities, and life insurance policies sold through Web sites or at a bank are not FDIC-insured, are not guaranteed by the bank, and can lose value.
6. Quite often banks that are chartered overseas are not FDIC insured. If you choose to use a bank chartered overseas, it is important to note that the FDIC may not insure your deposits.
Consumers often want to know how their personal information is used by their bank and whether it is shared with affiliates of the bank or other parties. Beginning in July 2001, banks are required to provide customers with a copy of their privacy policy, regardless of whether you are conducting business online or offline. Here, customers can learn what information the bank uses regarding its customers and whether it shares this with other companies.

It's important to remember that the Internet is a public network. So, it's important to learn how to safeguard banking information, credit card numbers, Social Security Number and other personal data. Look at the bank's Web site for information about its security practices, or contact the bank. Also, be informed about the Website's security features including:
1. Encryption: the process of scrambling private information to prevent unauthorized access.
2. Passwords or personal identification numbers (PINs): Used when accessing an account online. Choose a password unique to you and consider changing it regularly.
3. General Security: Security provided by your personal computer such as virus protection and physical access controls should be used and updated regularly.
Considered an added convenience to customers, some banks may offer links to merchants, retail stores, travel agents and other sites. Keep in mind that nonofficial Web sites linked to your banks' site are not FDIC-insured. These company's products and services may not be insured by the FDIC and your bank may not guarantee the products and services. Make sure you are comfortable with the reputation of a company before making a transaction and never provide a credit card or debit card number unless you initiate the transaction.

American Momentum Bank is a progressive, Florida based bank that strives to offer a deep understanding of our commercial, retail and online banking clients' immediate and long-range goals, unparalleled personal service, and solutions tailored to our Clients' specific needs. Experienced, professional management and Associates, combined with flexible decision making, is essential to the success of our Clients. Our banks' success is a result of our Clients' and Associates' success. For more information, please visit AmericanMomentum.com

Bank of America - The World's Largest Financial Institution

Bank of America is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, online banking, investing, asset management and other financial and risk-management products and services. They are a joint of the Global ATM Alliance, a attachment venture of several major international banks that allows customers of the banks to use their ATM card or check card at another bank within the Global ATM Alliance with no fees when traveling internationally.

This bank now processes more transactions online than it does through all of its physical banking centers. However, when a bank tells its customers that its online banking system is safe and secure, most people would be shocked to find out otherwise. Bank of America the leader in online banking rolled out its Mobile Banking service to consumers nationwide in May. The service enables more than 20 million online banking customers to bank directly from their cell phone or smart phone with built-in security features.

The company offers securities underwriting and other investment banking services to corporations. Bank of America has recently spent $675 million building its US investment banking business and is looking to become one of the top five investment banks worldwide. They operates more than 5,700 branch locations from which the company offers investment, banking, and loan services to consumers and businesses. Bank of America, itself a product of several big deals to create a retail bank that stretched from coast to coast, has long desired to be an investment banking power.

Customers looking for the nearest Bank of America ATM or banking center through the new service are served with Microsoft Map Point technology. Customers can seamlessly use Map Point from their phone to find the most convenient bank location around town. Consider One of the world's leading financial services companies, Bank of America is committed to making banking work for customers like it never has before.
Bank of America is a coast-to-coast dominant bank with a powerful and complete consumer franchise. This financial institution is in business is to help make communities stronger and to help people achieve their dreams. They are committed to taking a leadership role in helping to make economic development and environmental protection compatible. They are a leading global provider of integrated working capital management and treasury solutions to business and corporate clients of all sizes, financial institutions and governments worldwide.

Willie DeJarnette does a lot of research on banking online. He can be reached for more information at his website: Citizens Automobile Finance [http://www.citizens-automobile-finance.info]

Advantages of Banking Locally

With the number of banks that operate either nationally or internationally, there are practically a limitless number of options available to individuals looking to open new bank accounts. Chain banks may offer a larger brand recognition, but in many cases this recognition comes at the expense of the service and features that smaller banks can offer. Below you'll find some of the advantages that smaller local banks offer, to help you when you encounter the decision of whether to open an account with a larger chain bank or to choose a local bank instead.
Customer support
Local banks are generally more likely to have better support for the customers in their area, in no small part because of the fact that everyone involved in the customer support process are local to the area and in many cases have lived there for years. Quite often even the management and board of directors of the bank are largely local, and are much more likely and willing to adapt their business strategies to the wants and needs of the local community than larger chain banks would be.
Banking services

Though local banks aren't backed by national or international banking chains, they generally offer competitive services that meet or surpass those that are offered by large corporate banks. In addition, those who create services and set policies for local banks are much more likely to be directly involved with the customer support process and as such are more likely to attempt to meet the expectations and desires of their customers so that customers can receive the services that they're looking for.
Interest rates

Though interest rates are usually set at the national level and then adapted to the needs of the bank, independent local banks are generally more likely to offer lower rates than some of their corporate competitors because they are able to more readily adjust to the income levels and financial capabilities of the local community. As a related note, interest rates and loan terms can have a little more flexibility than they might in larger banks since everyone involved in the loan approval and management portions of bank operation are available locally; this means that getting loan modifications or specialized terms approved don't have to go through several different locations simply to get approved.
Local service

As mentioned above, having management and ownership of the bank occurring locally means that common customers have much more direct access to those in charge of the bank than those who are customers at national or international corporate banks. An added benefit of this is that the bank is usually more directly involved with the community that supports it, and is able to help keep money earned in the local area in that area. Local banks often sponsor a variety of different activities in the area, and may be involved in a variety of community service projects that other banks can't get the approval to participate in.
Investment

An important feature of local banks is the fact that individuals can often invest directly in the bank. Often local banks give shareholders advance notice and first options when they issue new shares of stock, and are likely to show a good return on any investments made. Should the bank begin to falter later on, there is also a much larger chance that a corporate bank will purchase it instead of letting it fail; this means that the previous shareholder will either have their shares purchased outright or (as is more likely) will be offered an equal value of stock in the major bank corporation that is buying the bank.

Corporate Governance In Indian Banks

Introduction
The concept of corporate governance, which emerged as a response to corporate failures and widespread dissatisfaction with the way many corporates function, has become one of the wide and deep discussions across the globe recently. It primarily hinges on complete transparency, integrity and accountability of the management. There is also an increasingly greater focus on investor protection and public interest. Corporate governance is concerned with the values, vision and visibility. It is about the value orientation of the organisation, ethical norms for its performance, the direction of development and social accomplishment of the organisation and the visibility of its performance and practices.
Indian Banking Industry
Indian banking has around 200 years of history and has undergone many transformations since independence. But, Liberalisation, Privatisation and Globalisation and Information Technology are currently changing the Indian banking radically.
Earlier, banking was virtually a monopoly of the public sector banks with full protection from the State. But the process of reforms in the Indian banking system has thrown them out to more liberal and free market forces. Now the banks, more particularly the public sector ones, feel the real heat of the competition. The interest rate cuts, dwindling margins and more number of players to serve a reduced number of bankable clients have all added to the worries of the banks. The customer has finally come to hold the center stage and all banking products are tailor-made to suit his tastes and preferences. This sudden change in the banking environment has bereaved the banks of all their comforts and many of them are finding it extremely difficult to cope with the change.
Need for Corporate Governance in Banks
o Since banks are important players in the Indian financial system, special focus on the Corporate Governance in the banking sector becomes critical.
o The Reserve Bank of India, as a regulator, has the responsibility on the nature of Corporate Governance in the banking sector.
o To the extent that banks have systemic implications, Corporate Governance in the banks is of critical importance.

o Given the dominance of public ownership in the banking system in India, corporate practices in the banking sector would also set the standards for Corporate Governance in the private sector.
o With a view to reducing the possible fiscal burden of recapitalising the PSBs, attention towards Corporate Governance in the banking sector assumes added importance.
Prerequisites for Good Governance

There are some pre-requisites for good corporate governance. They are:
o A proper system consisting of clearly defined and adequate structure of roles, authority and responsibility.
o Vision, principles and norms which indicate development path, normative considerations and guidelines and norms for performance.
o A proper system for guiding, monitoring, reporting and control.
Recommendations by the Birla Committee
The report of the Committee on Corporate Governance, set up by the Securities and Exchange board of India, under the Chairmanship of Kumar Mangalam Birla, is the first formal and comprehensive attempt to evolve a Code of Corporate Governance, in the context of prevailing conditions of governance in Indian companies, as well as the state of capital markets. The committee has identified the three key constituents of corporate governance.
Shareholders' Role

The role of shareholders in corporate governance is to appoint the directors and the auditors and to hold the board accountable for the proper governance of the company by requiring the board to provide them periodically with the requisite information, in transparent fashion, of the activities and progress of the company.
Board of Directors' Role
The board of directors performs the pivotal role in any system of corporate governance. It is accountable to the stakeholders and directs and controls the management. It stewards the company, sets its strategic aim and financial goals, and oversees their implementation, puts in place adequate internal controls and periodically reports the activities and progress of the company in a transparent manner to the stakeholders.
Management's Role
The responsibility of the management is to undertake the management of the company in terms of the direction provided by the board, to put in place adequate control systems and to ensure their operation and to provide information to the board on a timely basis and in a transparent manner to enable the board to monitor the accountability of management to it.

The Basel Committee Recommendations
The Basel Committee published a paper for banking organisations in September 1999. The Committee suggested that it is the responsibility of the banking supervisors to ensure that there is an effective corporate governance in the banking industry. It also highlighted the need for having appropriate accountability and checks and balances within each bank to ensure sound corporate governance, which in turn would lead to effective and more meaningful supervision.
Efforts were taken for several years to remedy the deficiencies of Basel I norm and Basel committee came out with modified approach in June 2004. The final version of the Accord titled " International Convergence of Capital Measurement And Capital Standards-A- Revised Framework" was released by BIS. This is popularly known as New Basel Accord of simply Basel ll. Base ll seeks to rectify most of the defects of Basel l Accord. The objectives of Basel ll are the following:
1. To promote adequate capitalisation of banks.
2. To ensure better risk management and
3. To strengthen the stability of banking system.
Essentials of Accord of Basel ll
o Capital Adequacy: Basel ll intends to replace the existing approach by a system that would use external credit assessments for determining risk weights. It is intended that such an approach will also apply either directly or indirectly and in varying degrees to the risk weighting of exposure of banks to corporate and securities firms. The result will be reduced risk weights for high quality corporate credits and introduction of more than 100% risk weight for low quality exposures.

Internet Banking - What You Need To Know

Internet banking has brought revolutionary changes to the financial world. Now, it has become much easier for you to perform various financial transactions over the Internet right from the comfort and privacy of your home. With the rapid popularity of Internet banking, opening a bank account and performing various transactions are now just a click away. Now there is no need to stand in the queue in order to get a bank account opened.
Technical Requirement To Access Internet Banking
You will be happy to know that you do not need any special hardware or software installed on your computer in order to access Internet banking. All you need is a computer system with Internet access, and you are ready to go. You are given a login ID and password to access your bank account. In most cases, the login ID is either the bank account number, or credit card number or ATM cum Debit card number.

Features Of Internet banking
Some of the tremendous array of features that Internet banking has to offer includes the following:
o You can get the bank statement right in your email inbox. If you are a businessperson, the online bank statement can be very advantageous for you. For example, you can import the data of the bank statement in a personal finance software program such as Quicken or Microsoft Money.

o The facility of electronic fund transfer is a great plus with Internet banking. You can send money online from one account to another either in the same bank or in any different bank.
o You can even make payments for your various utility bills like electricity and telephone bills, from your online bank account.
o You can also use your online account to purchase or sell investment products, such as shares, mutual funds and much more.
o Using the Internet banking, you can comfortably apply for various loans.
o If you have more than one account in a bank, the Internet banking allows you to access the extensive details of all your bank accounts at one place.

However, if you want to keep your experience with the Internet banking safe and pleasant, it is important for you to keep your personal information private and secure, such as your login id, password etc. Again, you should also make sure that when you are through, you log out from your online bank account thoroughly.

Check out everyday online banking [http://www.banking-mall.com/everyday-online-banking.html] for convenient banking services from home. Interested in offshore banking? Learn advantages of having an offshore banking [http://www.banking-mall.com/offshore-banking.html] to keep your funds overseas. Check out also bank of America online [http://www.banking-mall.com/] where you can setup various accounts including credit cards, savings and checking accounts.