Today, financial sector is spiking up. These financial sectors contain huge amount of data which is increasing on timely basis. Majority of data is in the banking sector. As data increases, frauds also get a green signal. Majority of frauds are associated with the banking sector. Common frauds in banking sector are frauds related to investments and money laundering. Knowingly or unknowingly if a bank is involved in any of these frauds then it has to face serious consequences.
Punjab and Maharashtra Cooperative Bank (PMC) operates in the areas of Maharashtra, Gujarat, Delhi, Goa, Karnataka, Madhya Pradesh and Andhra Pradesh. Being a scheduled urban cooperative bank, it was established in 1984. The PMC bank was involved in a serious fraud.
The higher executives of the bank dispensed huge loans to Housing Development and Infrastructure limited. As PMC Bank’s 70% of total credits were transferred to HDIL and its associated companies, it attracted the attention of authorities. The total fraud was estimated around 4355 crores. HDIL could operate the password protected masked bank accounts in the PMC bank. In order to conceal the loan accounts an approximate of 21049 ghost bank accounts were opened. The fraudster also tampered with the bank’s software.
When people came to know about this fraud, they were worried about their money as they were not allowed to withdraw their money. Assets around 3500 crores belonging to HDIL were sealed and the company’s chief was arrested by the Mumbai police. This fraud was brought to limelight by the women staff working in the bank.
The central bank has taken this strict measure and improved the policy and regulations to avoid any such frauds in future. It was a huge set back. In order to avoid fraudster from tampering software systems, information technology should be incorporated with the banking systems to strengthen the security.