Scams in Banks

by Shivani Ghildiyal on Friday 18 March 2011, 9:22 AM | Category: Legal| View: 1486 views


Over the years, breakers of the law have time and again managed to get around the country's banking and tax laws.Loopholes have resulted in their successful dealing in unaccounted money.   Since the securities scam of 1992,intelligence agencies have   begun investigations into the misuse of banking channels.It is now clear that large amounts of black money are laundered through banks and that they are being misused for illegal economic activities. Investigations reveal several kinds of misuse. 

Depositing of black money under fictitious names for laundering is the most prevalent misuse. The money is then transferred from these accounts–either by way of loans or investments.Recent investigations have unearthed many bank accounts in fictitious   names involving crores of rupees. 

A network of bogus investment companies is set up and several public companies are floated in order to launder black money by showing fictitious share subscriptions. Paying in forex against bogus imports is another way of using the system to serve illegal ends. A large number of cases have been detected where nonobservance of banking procedure has led to illegal remittances of foreign exchange through fake imports. 

The real and effective solution involves affixing the photograph of the account holder along with the specimen signature on the account opening form. Since people affix photographs on driving licences, ration cards, registration of properties and passports, there should not be any problem if they are asked to do the same at the time of opening a bank account. Already, illiterate persons are required to affix photographs and some banks such as Punjab & Sind Bank have provided cameras to the bank managers of rural branches for this purpose. In view of pervasive misuse of banking channels, there is no reason for not insisting on photographs being required to be affixed by all account holders. 

Credit card "double scan" machines can copy info from the magnetic strip of your card and create a new duplicate card for which your account will be billed for any purchases. Try to keep your card in sight when possible to avoid this problem.

The bank fraud at Citibank's Gurgaon branch has shocked consumers. The Reserve Bank of India warned banks earlier this year about an increase in bank frauds, especially in private banks. Investigations into the irregularities at Citibank Gurgaon branch came in the wake of a complaint that the bank was offering abnormal returns on an investment scheme for investors.

Termed as one of the largest banking scams in India, the CBI is investigating the disbursement by 27 banks to Zoom Developers. The ministry of finance has questioned Punjab National Bank, who is the lead banker to Zoom Developers. Nearly 27 Indian banks, with a majority of public sector banks have lent close to Rs 2,700 crore to Zoom Developers. This debt has been admitted in the corporate debt restructuring cell.

Internet Banking frauds are another major burning issue to ponder over.

Spam is an electronic 'junk mail' or unwanted messages that is sent to  your email account or mobile phone. They may try to persuade you to buy a product or service, or visit a website where you can make purchases; or they may attempt to trick you into divulging your bank account or credit card details.


Change your online banking password at regular intervals. Also, avoid easy-to-guess passwords, like first names, birthdays, kid's or spouse's name and telephone numbers.

Hence,with comfort and ease of online banking ,comes the need of being extremely cautious.


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