RESERVE BANK’S EARLY INITIATIVES
As a central bank in a developing country, the Reserve Bank of India (RBI) has adopted development of the banking and financial market as one of its prime objectives. “Institutional development” was the hallmark of this approach from 1950s to 1970s. In the 1980s, the Reserve Bank focused on “improvements in the productivity” of the banking sector. Being convinced that technology is the key for improving in productivity, the Reserve Bank took several initiatives to popularize usage of technology by banks in India.

Periodically, almost once in five years since the early 1980s, the Reserve Bank appointed committees and working Groups to deliberate on and recommend the appropriate use of technology by banks give the circumstances and the need. These committees are as follows:
-Rangarajan committee -1 in early 1980s.
-Rangarajan committee -11 in late 1980s.
-Saraf working group in early 1990s.
-Vasudevan working group in late 1990s.
-Barman working group in early 2000s.

Based on the recommendations of these committees and working groups, the Reserve Bank issued suitable guidelines for the banks. In the 1980s, usage of technology for the back office operations of the banks predominated the scene. It was in the form of accounting of transactions and collection of MIS. In the inter-bank payment systems, it was in the form of clearing and settlement using the MICR technology.

Two momentous decisions of the Reserve Bank in the 1990s changed the scenario for ever there are:
a) The prescription of compulsory usage of technology in full measure by the new private sector banks as a precondition of the license and
b) The establishment of an exclusive research institute for banking technology institute for development and Research in Banking Technology.

As the new private sector banks came on the scene as technology-savvy banks and offered several innovative products at the front office for the customers based on technology, the demonstration effect caught on the reset of the banks. Multi channel offerings like machine based (ATMs and pc-Banking), card based (credit/Debit/Smart cards), Communication based (Tele-Banking and Internet Banking) ushered in Anytime and Anywhere Banking by the banks in India. The IDRBT has been instrumental in establishing a safe and secure, state of the art communication backbone in the from of the Indian Financial NETwork (INFINET) as a closed user group exclusively for the banking and financial sector in India.

CHANGING FACE OF BANKING SERVICES
Liberalization brought several changes to Indian service industry. Probably Indian banking industry learnt a tremendous lesson. Pre-liberalization, all we did at a bank was deposit and withdraw money. Service standards were pathetic, but all we could do was grin and bear it. Post-liberalization, the tables have turned. It’s a consumer oriented market there.

Technology is revolutionizing every field of human endeavor and activity. One of them is introduction of information technology into capital market. The internet banking is changing the banking industry and is having the major effects on banking relationship. Web is more important for retail financial services than for many other industries.

Retail banking in India is maturing with time, several products, which further could be customized. Most happening sector is housing loan, which is witnessing a cut-throat competition. The home loans are very popular as they help you to realize your most cherished dream. Interest rates are coming down and market has seen some innovative products as well. Other retail banking products are personal loan, education loan and vehicles loan. Almost every bank and financial institution is offering these products, but it is essential to understand the different aspects of these loan products, which are not mentioned in their colored advertisements.

PLASTIC MONEY
Plastic money was a delicious gift to Indian market. Giving respite from carrying too much cash. Now several new features added to plastic money to make it more attractive. It works on formula purchase now repay later. There are different facts of plastic money credit card is synonyms of all.

Credit card is a financial instrument, which can be used more than once to borrow money or buy products and services on credit. Banks, retail stores and other businesses generally issue these. On the basis of their credit limit, they are of different kinds like classic, gold or silver.

Charged cards-these too carry almost same features as credit cards. The fundamental difference is you can not defer payments charged generally have higher credit limits or some times no credit limits.
Debit cards-this card is may be characterized as accountholder’s mobile ATM, for this you have to have account with any bank offering credit card.

Over the years, the banking sector in India has seen a no. of changes. Most of the banks have begun to take an innovative approach towards banking with the objective of creating more value for customers and consequently, the banks. Some of the significant changes in the banking sector are discussed below.

MOBILE BANKING
Taking advantages of the booming market for mobile phones and cellular services, several banks have introduced mobile banking which allows customers to perform banking transactions using their mobile phones. For instances HDFC has introduced SMS services. Mobile banking has been especially targeted at people who travel frequently and to keep track of their banking transaction.

RURAL BANKING
One of the innovative scheme to be launched in rural banking was the KISAN CREDIT CARD (KCC) SCHMME started in fiscal 1998-1999 by NABARD. KCC mode it easier for framers to purchase important agricultural inputs. In addition to regular agricultural loans, banks to offer several other products geared to the needs of the rural people.

Private sector Banks also realized the potential in rural market. In the early 2000′s ICICI bank began setting up internet kiosks in rural Tamilnadu along with ATM machines.

NRI SERVICES
With a substantial number of Indians having relatives abroad, banks have begun to offer service that allows expatriate Indians to send money more conveniently to relatives India which is one of the major improvements in money transfer.

E-BANKING
E-Banking is becoming increasingly popular among retail banking customers. E-Banking helps in cutting costs by providing cheaper and faster ways of delivering products to customers. It also helps the customer to choose the time, place and method by which he wants to use the services and gives effect to multichannel delivery of service by the bank. This E-Banking is driven by twin engine of “customer-pull and Bank-push”.

CONCLUSION
Technology has been one of the most important factors for the development of mankind. Information and communication technology is the major advent in the field of technology which is used for access, process, storage and dissemination of information electronically. Banking industry is fast growing with the use of technology in the from of ATMs, on-line banking, Telephone banking, Mobile banking etc., plastic card is one of the banking products that cater to the needs of retail segment has seen its number grow in geometric progression in recent years. This growth has been strongly supported by the development of in the field of technology, without which this could not have been possible of course it will change our lifestyle in coming years.

In recent years, universal banking has been growing its popularity in Indonesia. Mandiri Bank, for example, has taken strategy to become Indonesia’s universal bank; this bank has also initiated to develop an integrated financial risk system in terms of sounding financial performance and increasing shareholder value. In Germany, and most developed countries in Europe, universal banks have initiated its operations since nineteen century. There is mounting evidence that in those countries, universal banks have taken an important part in the development of real sectors and the financial system. In those countries, the growing numbers of universal banking practices are really supported by the regulation of central of bank.

Despite, in The United States, they are strict to regulate universal banks by blocking commercial banks from engaging in securities and stock markets practices. They argued that the practice of universal banking might be harmful for the financial system. ((Boyd et.al, 1998) cited in Cheang, 2004) The “risk” might be the key reason why the central bank of The U.S is worried about the universal banking system. Since, if the central of bank allowed banks to adjust their operation to be universal banks, the relationship among, banks, financial and stock markets would be closer. Consequently, this would give an uncertainty to the banks condition and performance. For example, if there were a disaster in stock market, banks would get problems in their financial positions. Thus, they would tend to be insolvent.

In addition universal banks would also threaten the market share of other specialized institutions, because more customers would choose universal banks that offer more option to their investment. Hence, more specialized institutions are likely to be ruined in the U.S financial industry.

One majoring factor, which is triggering a bank to be universal bank, is to increase the profit by enlarging their market share. According to João A. C. Santos (1998) universal bank itself can be defined as the financial institution, which enlarges its service range in terms of offering a variety of financial products and services in one site. Thus, by operating universal banking, banks could get a greater opportunity to expand to another financial area, such as : financial securities, insurance, hedge funds and etc.

Although the trend of banks has recently tended to universal banks, it is undoubtedly true that universal banks would also face further risks because a wide range of financial services is strongly associated with increasing risks and escalating monitoring costs. These are the major concerns why banks have to implement more advance technology in terms of financial risk management. Moreover, the practices of universal banks would cause significant risks to economy’s payment system. Since, the operation of universal banks connects closely to the financial and stock markets that are very fluctuate in a short term.

To win in the tight competition among financial institutions, banks have to alter their maneuver to lead in the market. Universal bank could be the wise choice for the bank manager, because they can attract more customers with a wide range of services. Furthermore, by altering their operation to the universal banking system, banks would get benefits from the efficiency and economies of scale.

In order to understand about the universal banking practices, this paper would examine the exclusive matters, which related to the risks and benefits in a universal bank. Moreover, this paper would also focus the whole impact of this institution to the financial system and the economy as a whole.

1.2 PROFITS AND COSTS IN UNIVERSAL BANKING: IMPLICATIONS FOR INDIVIDUAL BANKS

General problem related to financial intermediation, include universal banks and another type of banks, is about asymmetric information . It is the main problem that causes costs to increase and influence the performance of financial institutions. In Universal banks, the problems that would increase are slightly different with specialized banks; they are similar in that they should cope the risks problem associated with their financial position. Although, in universal banks, the risks are more bigger due to the wide range of financial instruments that they organized. Therefore, banks have to increase their spending on monitoring costs that are more complicated than specialized institutions or conventional banks.

Possible answer why more banks sacrifice to the escalating risks and transform it operation into the universal banking is that they want to compete and expand their market share, in order to seek a greater opportunity profits by serving more choices to their customers. Many banks has experienced a great performance after they alter their operation, the main concerns are that they could reach better economies of scale which can reduce the amount of spending in operational costs and also a greater opportunity to get more profits. The research finding which was conducted by Vender, R. (2002, cited in Cheang, 2004) about the efficiency of revenue in financial conglomerates and the level of both profit and cost in universal banking, has proved that both financial conglomerates and universal banking contain good performance in several indicators of bank profitability. His finding also suggests that the sustained expansion of financial conglomerates and universal banking practices may increase efficiency in the financial system.

This opinion is strengthen by another experts, like : George Rich and Christian Walter (1993). They state that universal banks which posse benefits over specialized institutions, are able to take advantage of reduction in the average cost of production and scope in banking. It is essential for banks that operate on a international level and in order to fulfill customer needs with a variety of financial services. They also mention a classic example how universal banks in some countries, such as : Switzerland, Germany and more European countries has experienced benefits by operating universal banking. In addition, they also state that the fear if universal bank would threaten specialized institutions has not proven. In Switzerland and Germany, for example, specialized institutions could achieve a better improvement in terms of cooperating with big banks. Universal banks are one of potential market channel which can sell their products directly to the customers, so specialized institutions also get additional return due to the increases in the number of universal banks. Therefore, this proves that universal banks do not threat other institutions; in fact, they support specialized institutions to market their products.

According to Fohlin, universal banking would lead to a bank’s concentration due to the increases the number of branch. Based on Germany’s experience, such branching-based expansion has led to the efficiency in banking because it could increase economies of scale in advertising and marketing, and open an enormous opportunity to enhance diversification and steadiness for banks.

A universal bank has unique position to tackle asymmetric information. As stated by Joao A. C. Santos (1998), that a universal bank has potential benefits on the reduction of agency cost and acquires profits due to information advantages. Although in other sides, universal banking also face problems related to the cost, conflict of interest and safety and soundness. But the default risk, which is generally happened in financial intermediation, would decrease substantially because universal banks are easier to control over their customers. Most of lenders in universal banks are their customers, so they can understand about the capacity of the customers from the information that they gather.

Nicholas Cheang (2004) also points out how universal banks could reduce a crucial problem in financial institution, asymmetric information. He argued that they could preserve a close relationship with their borrowers, by gathering more relevant information to make an important decision for investment. Their advantageous positions also vital to optimize the distribution of fund allocation, because banks have already known which investment that would give more margins to them. So, they don’t need to worry too much about the risk.

1.3 UNIVERSAL BANKS AND THE STABILITY IN THE FINANCIAL SYSTEM

Financial institution plays a vital role in terms of mobilizing funds in the economy. Consequently, stability in financial system is really important to manage by government in order to prevent wider implications to the real sectors. Financial disasters which happened in most countries in Asia in 1997 are the classic examples how importance to save banks to recover the economy.

As the financial supermarkets, which are handling a variety of financial instruments, they must face a greater risk than specialized institutions. As a consequence, this institution needs to be monitored closely in order to prevent more implications to the economy. According to Benston (1994), the escalating risks in universal banking would lead to a great problem because it can cause generous distress in the financial system. Hence, it will greatly increase the risk to the economy’s payment system. In another term, Rime and Strioh (2001) who examine the financial system in Switzerland in which universal banking are becoming more important in this country, state that difficulty in monitoring large universal banks is a major concern. This is the reason why universal bank has to spend more money in monitoring cost and develop an advanced system in information technology. In other words, it could say that the consequence of inefficient monitoring could lead to financial instability. (Cheang, 2004)

A wider range of universal banks in financial system makes the fund channels of banks to the customer are larger than specialized institutions. So, the economy will improve because universal banks will support more funding. This can be seen by the fact that a universal bank practice in Germany has triggered the progress of some enterprises performance in this country. (Stiglitz, 1985). It is understandable that when the allocation of fund can distribute widely and effectively to the potential enterprises, the economy will improve. In this context, universal banks have played as the key institution which mobilize fund to the potential lender.

Edwards (1996), has also proved that a universal bank is not just significantly contributed to economy from the external funds that they provide, but also from the improvement of the information flows. (cited in Cheang, 2004) Therefore, this proves that universal banks have played a significant role in terms of reducing the default risk by providing important information about the lender or customers. Furthermore, the safety of the financial system would be improved by the existence of universal banks.

1.4 CONCLUSION

The development of universal banks has to in line with the policy direction of central bank, because it is important to keep the stability of financial system and the economy as whole. There are three important areas that must be concerned related to universal bank operations, such as : the strengthened of capital and advanced risk management system. Consequently, in order to manage universal bank, people need to be aware about the unique of the risk type in universal banking. Furthermore, policy maker must also consider about the implication of universal banks in financial system.

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.

DEFINITION OF FRAUD

Fraud is defined as “any behavior by which one person intends to gain a dishonest advantage over another”. In other words , fraud is an act or omission which is intended to cause wrongful gain to one person and wrongful loss to the other, either by way of concealment of facts or otherwise.

Fraud is defined u/s 421 of the Indian Penal Code and u/s 17 of the Indian Contract Act. Thus essential elements of frauds are:

1. There must be a representation and assertion;

2. It must relate to a fact;

3. It must be with the knowledge that it is false or without belief in its truth; and

4. It must induce another to act upon the assertion in question or to do or not to do certain act.

BANK FRAUDS

Losses sustained by banks as a result of frauds exceed the losses due to robbery, dacoity, burglary and theft-all put together. Unauthorized credit facilities are extended for illegal gratification such as case credit allowed against pledge of goods, hypothecation of goods against bills or against book debts. Common modus operandi are, pledging of spurious goods, inletting the value of goods, hypothecating goods to more than one bank, fraudulent removal of goods with the knowledge and connivance of in negligence of bank staff, pledging of goods belonging to a third party. Goods hypothecated to a bank are found to contain obsolete stocks packed in between goods stocks and case of shortage in weight is not uncommon.

An analysis made of cases brings out broadly the under mentioned four major elements responsible for the commission of frauds in banks.

1. Active involvement of the staff-both supervisor and clerical either independent of external elements or in connivance with outsiders.

2. Failure on the part of the bank staff to follow meticulously laid down instructions and guidelines.

3. External elements perpetuating frauds on banks by forgeries or manipulations of cheques, drafts and other instruments.

4. There has been a growing collusion between business, top banks executives, civil servants and politicians in power to defraud the banks, by getting the rules bent, regulations flouted and banking norms thrown to the winds.

FRAUDS-PREVENTION AND DETECTION

A close study of any fraud in bank reveals many common basic features. There may have been negligence or dishonesty at some stage, on part of one or more of the bank employees. One of them may have colluded with the borrower. The bank official may have been putting up with the borrower’s sharp practices for a personal gain. The proper care which was expected of the staff, as custodians of banks interest may not have been taken. The bank’s rules and procedures laid down in the Manual instructions and the circulars may not have been observed or may have been deliberately ignored.

Bank frauds are the failure of the banker. It does not mean that the external frauds do not defraud banks. But if the banker is upright and knows his job, the task of defrauder will become extremely difficult, if not possible.

Detection of Frauds

Despite all care and vigilance there may still be some frauds, though their number, periodicity and intensity may be considerably reduced. The following procedure would be very helpful if taken into consideration:

1. All relevant data-papers, documents etc. Should be promptly collected. Original vouchers or other papers forming the basis of the investigation should be kept under lock and key.

2. All persons in the bank who may be knowing something about the time, place a modus operandi of the fraud should be examined and their statements should be recorded.

3. The probable order of events should thereafter be reconstructed by the officer, in his own mind.

4. It is advisable to keep the central office informed about the fraud and further developments in regard thereto.

Classification of Frauds and Action Required by Banks

The Reserve Bank of India had set-up a high level committee in 1992 which was headed by Mr. A… Ghosh, the then Dy. Governor Reserve Bank of India to inquire into various aspects relating to frauds malpractice in banks. The committee had noticed/observed three major causes for perpetration of fraud as given hereunder:

1. Laxity in observance of the laid down system and procedures by operational and supervising staff.

2. Over confidence reposed in the clients who indulged in breach of trust.

3. Unscrupulous clients by taking advantages of the laxity in observance of established, time tested safeguards also committed frauds.

In order to have uniformity in reporting cases of frauds, RBI considered the question of classification of bank frauds on the basis of the provisions of the IPC.
Given below are the Provisions and their Remedial measures that can be taken.

1. Cheating (Section 415, IPC)

Remedial Measures.

The preventive measures in respect of the cheating can be concentrated on cross-checking regarding identity, genuineness, verification of particulars, etc. in respect of various instruments as well as persons involved in encashment or dealing with the property of the bank.

2. Criminal misappropriation of property (Section 403 IPC).

Remedial Measure

Criminal misappropriation of property, presuppose the custody or control of funds or property, so subjected, with that of the person committing such frauds. Preventive measures, for this class of fraud should be taken at the level the custody or control of the funds or property of the bank generally vests. Such a measure should be sufficient, it is extended to these persons who are actually handling or having actual custody or control of the fund or movable properties of the bank.

3. Criminal breach of trust (Section 405, IPC)

Remedial Measure

Care should be taken from the initial step when a person comes to the bank. Care needs to be taken at the time of recruitment in bank as well.

4. Forgery (Section 463, IPC)

Remedial Measure

Both the prevention and detection of frauds through forgery are important for a bank. Forgery of signatures is the most frequent fraud in banking business. The bank should take special care when the instrument has been presented either bearer or order; in case a bank pays forged instrument he would be liable for the loss to the genuine costumer.

5. Falsification of accounts (Section 477A)

Remedial Measure

Proper diligence is required while filling of forms and accounts. The accounts should be rechecked on daily basis.

6. Theft (Section 378, IPC)

Remedial Measures

Encashment of stolen’ cheque can be prevented if the bank clearly specify the age, sex and two visible identify action marks on the body of the person traveler’s cheques on the back of the cheque leaf. This will help the paying bank to easily identify the cheque holder. Theft from lockers and safe deposit vaults are not easy to commit because the master-key remains with the banker and the individual key of the locker is handed over to the costumer with due acknowledgement.

7. Criminal conspiracy (Section 120 A, IPC)

In the case of State of Andhra Pradesh v. IBS Prasad Rao and Other, the accused, who were clerks in a cooperative Central Bank were all convicted of the offences of cheating under Section 420 read along with Section 120 A. all the four accused had conspired together to defraud the bank by making false demand drafts and receipt vouchers.

8. Offences relating to currency notes and banks notes (Section 489 A-489E, IPC)
These sections provide for the protection of currency-notes and bank notes from forgery. The offences under section are:

(a) Counterfeiting currency notes or banks.

(b) Selling, buying or using as genuine, forged or counterfeit currency notes or bank notes. Knowing the same to be forged or counterfeit.

(c) Possession of forged or counterfeit currency notes or bank-notes, knowing or counterfeit and intending to use the same as genuine.

(d) Making or passing instruments or materials for forging or counterfeiting currency notes or banks.

(e) Making or using documents resembling currency-notes or bank notes.

Most of the above provisions are Cognizable Offences under Section 2(c) of the Code of Criminal Procedure, 1973.

FRAUD PRONE AREAS IN DIFFERENT ACCOUNTS

The following are the potential fraud prone areas in Banking Sector. In addition to those areas I have also given kinds of fraud that are common in these areas.

Savings Bank Accounts

The following are some of the examples being played in respect of savings bank accounts:

(a) Cheques bearing the forged signatures of depositors may be presented and paid.

(b) Specimen signatures of the depositors may be changed, particularly after the death of depositors,

(c) Dormant accounts may be operated by dishonest persons with or without collusion of bank employees, and

(d) Unauthorized withdrawals from customer’s accounts by employee of the bank maintaining the savings ledger and later destruction of the recent vouchers by them.

Current Account Fraud

The following types are likely to be committed in case of current accounts.

(a) Opening of frauds in the names of limited companies or firms by unauthorized persons;

(b) Presentation and payment of cheques bearing forged signatures;

(c) Breach of trust by the employees of the companies or firms possessing cheque leaves duly signed by the authorized signatures;

(d) Fraudulent alteration of the amount of the cheques and getting it paid either at the counter or though another bank.

Frauds In Case Of Advances

Following types may be committed in respect of advances:

(a) Spurious gold ornaments may be pledged.

(b) Sub-standard goods may be pledged with the bank or their value may be shown at inflated figures.
(c) Same goods may be hypothecated in favour of different banks.

LEGAL REGIME TO CONTROL BANK FRAUDS

Frauds constitute white-collar crime, committed by unscrupulous persons deftly advantage of loopholes existing in systems/procedures. The ideal situation is one there is no fraud, but taking ground realities of the nation’s environment and human nature’s fragility, an institution should always like to keep the overreach of frauds at the minimum occurrence level.

Following are the relevant sections relating to Bank Frauds

Indian Penal Code (45 of 1860)

(a) Section 23 “Wrongful gain”.-

“Wrongful gain” is gain by unlawful means of property to which the person gaining is not legally entitled.

(b) “Wrongful loss”

“Wrongful loss” is the loss by unlawful means of property to which the person losing it is legally entitled.
(c) Gaining wrongfully.

Losing wrongfully-A person is said to gain wrongfully when such person retains wrongfully, as well as when such person acquires wrongfully. A person is said to lose wrongfully when such person is wrongfully kept out of any property, as well as when such person is wrongfully deprived of property.

(d) Section 24. “Dishonestly”

Whoever does anything with the intention of causing wrongful gain to one person or wrongful loss to another person, is said to do that thing “dishonestly”.

(e) Section 28. “Counterfeit”

A person is said to “counterfeit” who causes one thing to resemble another thing, intending by means of that resemblance to practice deception, or knowing it to be likely that deception will thereby be practiced.

BREACH OF TRUST

1. Section 408- Criminal breach of trust by clerk or servant.

2. Section 409- Criminal breach of trust by public servant, or by banker, merchant or agent.

3. Section 416- Cheating by personating

4. Section 419- Punishment for cheating by personation.

OFFENCES RELATING TO DOCMENTS

1) Section 463-Forgery

2) Section 464 -Making a false document

3) Section 465- Punishment for forgery.

4) Section 467- Forgery of valuable security, will, etc

5) Section 468- Forgery for purpose of cheating

6) Section 469- Forgery for purpose of harming reputation

7) Section 470- Forged document.

Section 471- Using as genuine a forged document

9) Section 477- Fraudulent cancellation, destruction, etc., of will, authority to adopt, or valuable security.

10) Section 477A- Falsification of accounts.

THE RESERVE BANK OF INDIA ACT, 1934

Issue of demand bills and notes Section 31.

Provides that only Bank and except provided by Central Government shall be authorized to draw, accept, make or issue any bill of exchange, hundi, promissory note or engagement for the payment of money payable to bearer on demand, or borrow, owe or take up any sum or sums of money on the bills, hundis or notes payable to bearer on demand of any such person

THE NEGOTIABLE INSTRUMENTS ACT, 1881

Holder’s right to duplicate of lost bill Section 45A.

1. The finder of lost bill or note acquires no title to it. The title remains with the true owner. He is entitled to recover from the true owner.

2. If the finder obtains payment on a lost bill or note in due course, the payee may be able to get a valid discharge for it. But the true owner can recover the money due on the instrument as damages from the finder.

Section 58

When an Instrument is obtained by unlawful means or for unlawful consideration no possessor or indorse who claims through the person who found or so obtained the instrument is entitled to receive the amount due thereon from such maker, acceptor or holder, or from any party prior to such holder, unless such possessor or indorse is, or some person through whom he claims was, a holder thereof in due course.

Section 85:

Cheque payable to order.

1. By this section, bankers are placed in privileged position. It provides that if an order cheque is indorsed by or on behalf of the payee, and the banker on whom it is drawn pays it in due course, the banker is discharged. He can debit his customer with the amount so paid, though the endorsement of the payee might turn out to be a forgery.

2. The claim protection under this section the banker has to prove that the payment was a payment in due course, in good faith and without negligence.

Section 87. Effect of material alteration

Under this section any alteration made without the consent of party would be void. Alteration would be valid only if is made with common intention of the party.

Section 138. Dishonour of cheque for insufficiency, etc., of funds in the account.

Where any cheque drawn by a person on an account maintained by him with a banker for payment of any amount of money to another person from out of that account for the discharge, in whole or in part, of any debt or other liability, is returned by the bank unpaid. either because of the amount of money standing to the credit of that account is insufficient to honour the cheque or that it exceeds the amount arranged to be paid from that account by an agreement made with that bank, such person shall be deemed to have committed an offence and shall, without prejudice.

Section 141(1) Offences by companies.

If the person committing an offence under Section 138 is a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

SECURITY REGIME IN BANKING SYSTEM

Security implies sense of safety and of freedom from danger or anxiety. When a banker takes a collateral security, say in the form of gold or a title deed, against the money lent by him, he has a sense of safety and of freedom from anxiety about the possible non-payment of the loan by the borrower. These should be communicated to all strata of the organization through appropriate means. Before staff managers should analyze current practices. Security procedure should be stated explicitly and agreed upon by each user in the specific environment. Such practices ensure information security and enhance availability. Bank security is essentially a defense against unforced attacks by thieves, dacoits and burglars.

PHYSICAL SECURITY MEASURES-CONCEPT

A large part of banks security depends on social security measures. Physical security measures can be defined as those specific and special protective or defensive measures adopted to deter, detect, delay, defend and defeat or to perform any one or more of these functions against culpable acts, both covert and covert and acclamations natural events. The protective or defensive, measures adopted involve construction, installation and deployment of structures, equipment and persons respectively.

The following are few guidelines to check malpractices:

1. To rotate the cash work within the staff.

2. One person should not continue on the same seat for more than two months.

3. Daybook should not be written by the Cashier where an other person is available to the job

4. No cash withdrawal should be allowed within passbook in case of withdrawal by pay order.

5. The branch manager should ensure that all staff members have recorder their presence in the attendance registrar, before starting work.

Execution of Documents

1. A bank officer must adopt a strict professional approach in the execution of documents. The ink and the pen used for the execution must be maintained uniformly.

2. Bank documents should not be typed on a typewriter for execution. These should be invariably handwritten for execution.

3. The execution should always be done in the presence of the officer responsible for obtain them,
4. The borrowers should be asked to sign in full signatures in same style throughout the documents.

5. Unless there is a specific requirement in the document, it should not be got attested or witnessed as such attestation may change the character of the instruments and the documents may subject to ad volrem stamp duty.

6. The paper on which the bank documents are made should be pilfer proof. It should be unique and available to the banks only.

7. The printing of the bank documents should have highly artistic intricate and complex graphics.

8. The documents executed between Banker and Borrowers must be kept in safe custody,

CHANGES IN LEGISLATIONS AFTER ELECTRONIC TRANSACTIONS

1. Section 91 of IPC shall be amended to include electronic documents also.

2. Section 92 of Indian Evidence Act, 1872 shall be amended to include commuter based communications

3. Section 93 of Bankers Book Evidence Act, 1891 has been amended to give legal sanctity for books of account maintained in the electronic form by the banks.

4. Section 94 of the Reserve Bank of India Act, 1939 shall be amended to facilitate electronic fund transfers between the financial institutions and the banks. A new clause (pp) has been inserted in Section 58(2).

RECENT TRENDS OF BANKING SYSTEM IN INDIA

In the banking and financial sectors, the introduction of electronic technology for transactions, settlement of accounts, book-keeping and all other related functions is now an imperative. Increasingly, whether we like it or not, all banking transactions are going to be electronic. The thrust is on commercially important centers, which account for 65 percent of banking business in terms of value. There are now a large number of fully computerized branches across the country.

A switchover from cash-based transactions to paper-based transactions is being accelerated. Magnetic Ink character recognition clearing of cheques is now operational in many cities, beside the four metro cities. In India, the design, management and regulation of electronically-based payments system are becoming the focus of policy deliberations. The imperatives of developing an effective, efficient and speedy payment and settlement systems are getting sharper with introduction of new instruments such as credit cards, telebanking, ATMs, retail Electronic Funds Transfer (EFT) and Electronic Clearing Services (ECS). We are moving towards smart cards, credit and financial Electronic Data Interchange (EDI) for straight through processing.

Financial Fraud (Investigation, Prosecution, Recovery and Restoration of property) Bill, 2001

Further the Financial Fraud (Investigation, Prosecution, Recovery and Restoration of property) Bill, 2001 was introduced in Parliament to curb the menace of Bank Fraud. The Act was to prohibit, control, investigate financial frauds; recover and restore properties subject to such fraud; prosecute for causing financial fraud and matters connected therewith or incidental thereto.

Under the said act the term Financial Fraud has been defined as under:

Section 512 – Financial Fraud

Financial frauds means and includes any of the following acts committed by a person or with his connivance, or by his agent, in his dealings with any bank or financial institution or any other entity holding public funds;

1. The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;

2. The active concealment of a fact by one having knowledge or belief of the fact;

3. A promise made with out any intention of performing it;

4. Any other act fitted to deceive;

5. Any such act or omission as the law specially declares to be fraudulent.
Provided that whoever acquires, possesses or transfers any proceeds of financial fraud or enters into any transaction which is related to proceeds of fraud either directly or indirectly or conceals or aids in the concealment of the proceeds of financial fraud, commits financial fraud.

513(a) – Punishment for Financial Fraud

Whoever commits financial fraud shall be: (a) Punished with rigorous imprisonment for a term, which may extend to seven years and shall also be liable to fine.

(b)Whoever commits serious financial fraud shall be punished with rigorous imprisonment for a term which may extend to ten years but shall not be less than five years and shall also be liable for fine up to double the amount involved in such fraud.

Provided that in both (a) and (b) all funds, bank accounts and properties acquired using such funds subjected to the financial fraud as may reasonably be attributed by the investigating agency shall be recovered and restored to the rightful owner according to the procedure established by law.

CONCLUSION

The Indian Banking Industry has undergone tremendous growth since nationalization of 14 banks in the year 1969. There has an almost eight times increase in the bank branches from about 8000 during 1969 to mote than 60,000 belonging to 289 commercial banks, of which 66 banks are in private sector.

It was the result of two successive Committees on Computerization (Rangarajan Committee) that set the tone for computerization in India. While the first committee drew the blue print in 1983-84 for the mechanization and computerization in banking industry, the second committee set up in 1989 paved the way for integrated use of telecommunications and computers for applying technogical breakthroughs in banking sector.

However, with the spread of banking and banks, frauds have been on a constant increase. It could be a natural corollary to increase in the number of customers who are using banks these days. In the year 2000 alone we have lost Rs 673 crores in as many as 3,072 number of fraud cases. These are only reported figures. Though, this is 0.075% of Rs 8,96,696 crores of total deposits and 0.15% of Rs 4,44,125 crores of loans & advances, there are any numbers of cases that are not reported. There were nearly 65,800 bank branches of a total of 295 commercial banks in India as on June 30, 2001 reporting a total of nearly 3,072 bank fraud cases. This makes nearly 10.4 frauds per bank and roughly 0.47 frauds per branch.

An Expert Committee on Bank Frauds (Chairman: Dr.N.L.Mitra) submitted its Report to RBI in September 2001. The Committee examined and suggested both the preventive and curative aspects of bank frauds.

The important recommendations of the Committee include:

o A need for including financial fraud as a criminal offence;

o Amendments to the IPC by including a new chapter on financial fraud;

o Amendments to the Evidence Act to shift the burden of proof on the accused person;

o Special provision in the Cr. PC for properties involved in the Financial Fraud.

o Confiscating unlawful gains; and preventive measures including the development of Best Code Procedures by banks and financial institutions.

Thus it can be concluded that following measures should necessarily be adopted by the Ministry of Finance in order to reduce cases of Fraud.

o There must be a Special Court to try financial fraud cases of serious nature.

o The law should provide separate structural and recovery procedure. Every bank must have a domestic enquiry officer to enquire about the civil dimension of fraud.

o A fraud involving an amount of ten crore of rupees and above may be considered serious and be tried in the Special Court.

The Twenty-ninth Report of the Law Commission had dealt some categories of crimes one of which is “offences calculated to prevent and obstruct the economic development of the country and endanger its economic health.” Offences relating to Banking Fraud will fall under this category. The most important feature of such offences is that ordinarily they do not involve an individual direct victim. They are punishable because they harm the whole society. It is clear that money involved in Bank belongs to public. They deposit there whole life’ security in Banks and in case of Dacoity or Robbery in banks the public will be al lost. Thus it is important that sufficient efforts should be taken in this regard.

There exists a new kind of threat in cyber world. Writers are referring it as “Salami Attack” under this a special software is used for transferring the amount from the account of the individual. Hence the culprits of such crimes should be found quickly and should be given strict punishment. Moreover there is requirement of more number of IT professionals who will help in finding a solution against all these security threats.

Since those times, banking evolved in many aspects. Banking regulations were formulated, additional services such as lending became part of banking and things such as adding interest to loans became common bank practices. Now with the emergence of the latest technologies and the Internet, banking has taken a new face. People can now access bank account online and transact business with the bank with greater convenience and security through the Internet.

Online Banking

Performing bank transactions through the Internet is generally referred to as online banking or Internet banking. This form of banking allows consumers to directly access their bank account online (usually savings account) and obtain any information about their account. This direct-to-consumer system is faster and more convenient for consumers compared to traditional banking systems. Especially if you are to withdraw money after banking hours, this banking system may be your easiest and sole solution. You just have to connect to the Internet trough your personal computer and access your bank account in an instant.

Online-only banks

Many popular banks offer online banking as one of their services; however there are also some banks that transact businesses solely online, so you have no other choice but to access your bank account online and avail of other bank services through the Internet. The latter are referred to as online-only banks. These banks virtually exist yet they provide services traditional banks offer, only that they are done through the Internet.

Benefits

Today as more and more time are consumed by people in using the Internet in several activities, including getting access to their bank account online, online-only banks proved to be more convenient and beneficial. Aside from the fast transactions, one may also benefit from the bank’s high interest rates and budget-friendly transaction fees considering that online-only banks operate only online. Cost of processing bank transactions are relatively lower so the bank can afford to give consumers high interest rates on savings account.

Online Banking Industry

Although a lot are using the Internet, online-only banking industry began to grow only sometime in 2000 when a popular online bank devised much simpler and more convenient banking transactions online and paid consumers high interest rates. Earlier banks that tried this form of banking did not succeed because of their expensive transaction fees and lower interest rates. Moreover, procedures in getting access to bank accounts online were more complicated and consumers were afraid of Internet fraud. The industry eventually grew bigger and more stable beginning 2003 as the use of the Internet got more commonplace, prevalent and secure.

Deposits & Withdrawals
How can I deposit money in my Swiss bank account?

Once your account has been opened, you can deposit money to your account in several ways:

* Cash deposit
* Traveller’s check deposit
* Securities deposit
* Transfer from another account
* Receive a bank transfer
* Personal checks
* Bank checks

Selecting the most appropriate method of deposit depends on the amount deposited, the degree of confidentiality desired and the level of convenience.

Can traveller’s checks be tracked?

The issuing bank can discover where traveller’s checks were cashed. In fact, you are always required to reveal your identity when making a purchase with traveller’s checks. Since each check is identifiable by a unique number, it is possible to trace it. However, in practice this type of search is rarely conducted.

Can I make a deposit with a postal order?

At the time of writing this, there are no known restrictions in Switzerland regarding receiving deposits in the form of postal money orders to your Swiss bank account. However, you should verify that the postal system you are using allows you to send money to a foreign bank account.

Search for a lender or home loan, lenders and more. Consumers can find a loan broker or lender offering purchase, refinance or home improvement loan in your neighborhood to be undergoing repairs that you want, Find mortgage rates for home refinancing and purchase a new home with no cost quotes from lenders, Now you can locate the top lenders and mortgage lending professionals for conventional and government in the house in your country. Sometimes finding a local home loan can sometimes be difficult, but the Mortgage Lenders makes it easy for you.

For expatriates, international business professionals or those with cross border needs who are seeking a straightforward offshore personal bank account, Barclays International Personal Banking from Barclays International and Private Banking Division offers easy and secure access to funds with telephone and internet banking available, discounts on international money transfers, the ability to bank in multiple currencies, international mortgages, UK tax advice, good interest rates and a safe and secure account are also offered and assured. For expatriates, international business professionals or those with cross border needs who are seeking a straightforward offshore personal bank account, Barclays International Personal Banking from Barclays International and Private Banking Division offers easy and secure access to funds with telephone and internet banking available, discounts on international money transfers, the ability to bank in multiple currencies, international mortgages, UK tax advice, good interest rates and a safe and secure account are also offered and assured. Offshore corporate banking services available from Barclays offer corporate clients or intermediaries the ability to streamline cross border trading and banking. In terms of the Barclays’ offshore banking services available, the group offer personal, corporate and private banking solutions as well as a unique international premier banking solutions for those with in excess of GBP 100,000 to bank and invest. For those seeking private offshore banking solutions there is an international private banking division at Barclays and also the aforementioned premier banking solutions which are available to those who require a more personalised banking and investment service from Barclays.

In terms of the Barclays’ offshore banking services available, the group offer personal, corporate and private banking solutions as well as a unique international premier banking solutions for those with in excess of GBP 100,000 to bank and invest. For those seeking private offshore banking solutions there is an international private banking division at Barclays and also the aforementioned premier banking solutions which are available to those who require a more personalised banking and investment service from Barclays. For those seeking private offshore banking solutions there is an international private banking division at Barclays and also the aforementioned premier banking solutions which are available to those who require a more personalised banking and investment service from Barclays. Offshore corporate banking services available from Barclays offer corporate clients or intermediaries the ability to streamline cross border trading and banking. Their relevant corporate products and services include financing, investing, day to day banking and trading – and as with personal Barclays offshore bank accounts, corporate accounts are also safe and secure as Barclays is a bank with an excellent reputation.

Offshore Private banking is most suited to those with in excess of GBP 1 million and the premier banking service is for those with in excess of GBP 100,000 – either to invest, trade or bank. For those seeking private offshore banking solutions there is an international private banking division at Barclays and also the aforementioned premier banking solutions which are available to those who require a more personalised banking and investment service from Barclays. But because Barclays has a growing international presence particularly across Europe, America, Africa and Asia their presence on the international high street is becoming more high profile. Barclays’ offshore banking solutions are often chosen by British expatriates who already have a business relationship with the bank before they leave the UK and who are aware of the bank’s pedigree and reputation. Their relevant corporate products and services include financing, investing, day to day banking and trading – and as with personal Barclays offshore bank accounts, corporate accounts are also safe and secure as Barclays is a bank with an excellent reputation.

For expatriates, international business professionals or those with cross border needs who are seeking a straightforward offshore personal bank account, Barclays International Personal Banking from Barclays International and Private Banking Division offers easy and secure access to funds with telephone and internet banking available, discounts on international money transfers, the ability to bank in multiple currencies, international mortgages, UK tax advice, good interest rates and a safe and secure account are also offered and assured. For expatriates, international business professionals or those with cross border needs who are seeking a straightforward offshore personal bank account, Barclays International Personal Banking from Barclays International and Private Banking Division offers easy and secure access to funds with telephone and internet banking available, discounts on international money transfers, the ability to bank in multiple currencies, international mortgages, UK tax advice, good interest rates and a safe and secure account are also offered and assured. Offshore Private banking is most suited to those with in excess of GBP 1 million and the premier banking service is for those with in excess of GBP 100,000 – either to invest, trade or bank. All in all Barclays offshore banking division services the main requirements of the individual and corporate client, and because Barclays have a good industry recognised reputation from Standard and Poors, Fitch and Moodys their offshore and international client base is apparently growing. Barclays’ offshore banking solutions are often chosen by British expatriates who already have a business relationship with the bank before they leave the UK and who are aware of the bank’s pedigree and reputation.

Auto insurance companies cover you and your passengers in the event of an accident. But it is up to you to decide the level of cover you will get.

Will the damages to your property be covered by the company? Will all the passengers be covered or only your family? What if your daughter was driving your car?

What questions should you ask your auto insurance company when it comes to auto insurance? This article help you choose between the various insurance policies.

Types of auto insurance

Liability insurance, or third party insurance.

This is general the lowest form of insurance offered by an auto insurance company. This is the basic insurance, if you are involved in an accident, and it is proven to be your fault, the auto insurance company will pay damages to the other party.

The cover offered by the auto insurance company is usually set beforehand. These are the maximum amount the auto insurance company will pay in case of accident

For example the agent will agree on a $10000 coverage per person, (bodily injury) and/or $40000 coverage in bodily injury and/or $10000 in property damage per accident

You need to confirm with your auto insurance company what they will cover and what are the limits.

You might be offered a very low premium by some auto insurance company only to realize that your cover is minimal and unrealistic.

Collision and comprehensive coverage, comprehensive insurance and full comprehensive insurance

An auto insurance company will also offer you a comprehensive insurance, as the name indicates, you will be comprehensively covered.

In simple terms it means that if you are responsible for a collision the insurance company will pay for the repair of the vehicle.

But it is not so simple, an auto insurance company will almost always have the final say on what amount will be paid out, so if it is cheaper to give you market value for the car, then they will.

You might think that your car is worth $1000.00 but the real market value might be $500.00. This is not an uncommon scenario. So if the repair of your car are more than $500.00 then the auto insurance company will simply pay the book value of the car.

You must make sure that the insurance company is not in control of the market value of the car, normally organisations like the AA will give an impartial market value.

As with the third party insurance, the auto insurance company will almost certainly limit the amount that will be paid out, but in general terms, a comprehensive insurance will have higher limits.

Recreation Vehicle

A recreation vehicle needs its own insurance, a Recreation vehicle insurance is not the same as auto insurance.
You should not assume that because your car is comprehensively insured, so is your recreation vehicle.

Other Types of auto insurance

Medical (MedPay), Persona Injury protection (PIP) and no fault cover

This insurance will cover you and your passengers medical expenses in the event of a collision.

The no fault cover means that the auto insurance company will pay regardless of who is at fault. This give you the piece of mind that, at the very least, your family and friends are covered.

PIP is often a minimum requirement in some countries or states, ask your auto insurance company what the requirements are.

Uninsured/Underinsured motorists’ coverage

This cover, (also sometimes a minimum requirement in some states), will cover you if the person at fault is not insured or is underinsured.

You must ask your auto insurance company what you will be charged in case of such a situation. Normally the auto insurance company should not charge you some extra premiums.

Rental reimbursement, towing and labour

Those ‘extras’ often given with a comprehensive insurance is often use by auto insurance companies as specials.

So in case your car is damaged the auto insurance company will pay for rental costs, (sometimes only for a few days).

The auto insurance company might also offer to pay for the towing of your vehicle, (not always included).

As always you should ask your auto insurance company what is included in the cover.

The legal requirements.

Most states, and most countries will require a certain level of cover, from full comprehensive car insurance to third party auto insurance.

In most cases it is up to you, the driver, to ensure that your auto insurance company offers you the minimum required. In most cases the insurance company, (the auto insurance company), is under no obligation to instruct you of the requirements.

Everyone knows that car insurance companies are not all equal. Cheap car insurance is wonderful when paying the bill, but make a mistake on the company you select and you could find that the cheap car insurance policy that you found may turn into a nightmare. Cheap car insurance may not turn out to be so attractive when making a claim.

So if you have found a discount car insurance broker don’t just take the cheapest quote that you get. You need to find out a little about the insurance company that is offering the cheap car insurance rates.

And there’s ways to reduce the cost of your car insurance even with the best of companies. Here are some tips for those looking for cheap car insurance to help reduce the cost of car insurance without compromising other things.

7 Cheap Car Insurance Tips

1. Look at your deductible amount. This is the amount that you pay first out of any claim. The cost of your policy is directly related to this amount. Many people, particularly those who have had their insurance policy for a long time, have never considered whether they ought to vary their deductible. If you have a good driving record and are prepared to increase the risk of paying a larger amount in the event of a (hopefully unlikely) claim you can save money by increasing your deductible.

2. Have a look at the type of car you drive. Certain types of cars attract higher car insurance rates. Cars such as sports cars and also certain makes and models that are prime theft candidates cost more to insure. If you are buying a car then find out which makes and models these are before you buy.

3. Drive carefully. Although it sounds a little trite to say it, your car insurance cost is a factor of your risk profile. You won’t get cheap car insurance if you have had 3 speeding fines and 2 accidents in the last year. These things are all taken into account and you should take care with how you drive. It all adds up onto your bill. There are big safe driver discounts available.

4. Considering installing safety and anti theft devices in your car. Again these affect your risk profile. If you have a car that is safer and less at risk of theft it should be cheaper to insure. And if you have a car with certain safety devices now check that your insurance company is aware of these, if not tell them.

5. Look at your policy when it comes to renewal time, don’t just pay. There are some things that you can vary in your policy that will affect the cost. Often there are some things there which duplicate other insurance that you may have that can be eliminated. Be critical, look carefully and ask questions about all these before you renew your policy.

6. Have a look at who your other insurers are. Many insurers offer a discount for multiple policies. If you insure your house with a certain company then ring them up and find out if they do car insurance. Get a quote from them. Find out what discounts they offer.

7. Find a good online discount car insurance broker before renewing. The internet is a fabulous resource. Use it. There are all sorts of discount insurance brokers online where you can get fast quotes from a wide range of companies. Don’t just settle for the same company you always use. Car insurance rates vary all the time. Always get comparable quotes before renewing any policy.

So if you’re in the market for cheap car insurance there’s some ideas for you. Don’t just accept that car insurance is always prohibitively expensive, get out there and do something about it.

FACT: Examine closely the financial statements of any U.S. Bank. You will see that their “gross” profits against customer deposits can range from 25% to 40% — but — they have laws written in stone to limit the interest amount they can pay customers on their deposits. The U.S. banks place their earnings into unnecessary frills and non-productive expenditures like fancy buildings etc., while offshore banking facilities don’t do this and share their profits with their customers.

FICTION: Offshore banking isn’t regulated, so you are at risk of losing all money deposited with them.

FACT: The truth is that every country in the free world has regulations, rules and laws governing financial institutions and banks. Those regulations, rules, and laws, however, are much less restrictive than the “protectionist” U.S. banking regulations, rules, and laws and allow the offshore banking industry better opportunity to earn much greater profits for their investors and depositors.

FICTION: Offshore banking facilities are not insured by the F.D.I.C.

FACT: Some of the banks are but not that many. If they are, they must comply with the same protectionist banking regulations and rules as all the other F.D.I.C. insured banks. But, the majority of offshore banking facilities are insured; one way or another.

Depositor insurance programs similar to the F.D.I.C. program have been established in some countries, so that the banks in those countries have their deposits insured. Independent insurance companies insure the deposits of offshore banking facilities in other countries AND unlike the F.D.I.C., insure 100% of the banks deposits; not just those under $100,000. (By the way, some of the banks in the U.S. insure their deposits with independent insurance companies and many banks in the U.S. are not F.D.I.C. insured)

Offshore banking is “self-insured” for the most part which means those banks have a liquidity factor equal to 100% (or more) of the deposits on the books. Those banks have $1 (or more) in liquid assets for every $1 held on deposit. Therefore, there is no bank run because they can cover any depositor demand.

Self-insured offshore banking is actually more secure than F.D.I.C. insured U.S. banking. Why? Because the F.D.I.C. insured U.S. banks are permitted to maintain a liquidity factor equivalent to approximately 10 percent of their public deposits. (Is it any wonder why more U.S. banks fail each year than in any other country?)

Which kind of bank would you feel more safe having your money in? An offshore banking institution which as one dollar in cash for every dollar on deposit, or a U.S. bank which as ten cents in cash for every dollar that shows up on the deposit statement they give their clients?

FICTION: Offshore banking isn’t as big or strong as U.S. banking.

FACT: Of the strongest and largest big banks in the world (in assets), one bank ONLY is located in the United States:

Here are the safest offshore banks in the world, according to a ranking done in 2007 after examining their total assets in US dollars. This ranking is compiled from balance sheet information included on AllBanks.org

1 UBS AG Switzerland 2 Barclays UK 3 The Royal Bank of Scotland Group UK 4 Deutsche Bank AG Germany 5 BNP Paribas SA France 6 The Bank of Tokyo-Mitsubishi UFJ Ltd Japan 7 ABN AMRO Holding NV Netherlands 8 Societe Generale France 9 Credit Agricole SA France 10 Bank of America NA USA

2008/2009 UPDATE AFTER THE FINANCIAL COLLAPSE OF 2008

Germany’s largest bank, Deutsche Bank AG, reported a fourth quarter loss of about $6.3 billion. A year earlier, the bank posted a profit of about $1.3 billion (1 billion euros), Bloomberg reported.

Royal Bank of Scotland is expected to post losses of as high as £1.7 billion.

Bucking the trend is a bank not even on the list above and that bank is Standard Chartered bank which is expecting to post profits of 1.3 billion pounds. I have a contact who can help you open an account at this bank for your company if you desire to do so. The account would be in Hong Kong.

Another bank I know about is rated AAA by an independent rating service and if you are not from the U.S. or if you are from the U.S. and have a foreign LLC or IBC to open the account with then you can deposit $15,000 and get involved in their borrow low and deposit high program which has earned depositors as much as 100% per year on their deposit. It is easy to open an account there.

FICTION: Offshore banking must not be very good, or more facilities would advertise their services in newspapers and magazines in the U.S.

FACT: Offshore banking in general is restricted by law from advertising in magazines, newspapers, radio and on T.V. unless they come under the same protectionist rules and regulations that are placed upon U.S. banks. Knowing that, you should be cautious about doing business with any offshore banking facility that publicly advertises in the U.S. media. Because you can be very sure that they have sold-out to the U.S. banking establishment and that establishment will end up selling you out to those who make the rules.

FICTION: Offshore banking is only for the wealthy.

FACT: About 25 years ago, that may have been true. But I know of about three offshore banking facilities that will allow you to open an account for as little as $500. One of these is in the Asia, another in Europe, and another in Latin America.

FICTION: Opening an account at an offshore banking facility is too difficult, and it is very difficult to get a withdrawal when you need it.

FACT: Opening an account at an offshore banking facility is easy because you just follow the instructions they give to you. Getting your money out only requires a request that you fax or email with an attachment included.

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