Need of forensic accounting to detect and prevent frauds in Banking Industry of India

Abstract

Banks play a pivotal role in any country's economy, but they also face various risks, including fraud, unethical practices, and regulatory breaches due to the complexity of financial operations. India, a fast-developing nation, has experienced several high-profile banking frauds in recent years. In this paper it is tried to examine the crucial role of forensic accounting in the Indian banking sector to prevent and detect fraud. Forensic accountants combine accounting, auditing, and investigative skills to uncover financial misconduct. They serve as protectors and detectives in the banking world, identifying irregular transactions, analysing financial records, and using data analysis to detect fraud. The Reserve Bank of India has mandated regulations for forensic accountants, ensuring a regulated environment. The introduction of Forensic Accounting and Investigation Standards (FAIS) is a great initiative by ICAI. In this paper it is tried to highlight the importance of forensic accounting in fraud detection, internal investigations, and compliance with financial regulations. The present paper underscores the need for proactive measures and specialized education in forensic accounting to protect the integrity of India's financial system.