A STUDY TO INVESTIGATE THE REASONS FOR BANK FRAUDS IN INDIAN BANKING INDUSTRY

Abstract

Multiple loan fraud is a problem faced by a signifi-cantly large number of banks and financial institutions in not only the real estate sector, but other sectors too. Every year, it results in a high number of bad debts and financial losses to the lenders. At every level, there were numerous instances where borrowers successfully obtained loans from multiple financial institutions against the same surety. In majority of the cases, it was the real estate builders with turnover in hundreds of crores, with political and financial clout, and a deep understanding of how the system works, more importantly, the inherent weaknesses that could be exploited. In many instances, it was not possible without the explicit involvement of the staff from the lending institutions, which went at length to oblige these borrowers, in return for under-the-table payoffs