A STUDY ON AWARENESS OF FORENSIC ACCOUNTING AND RISK MANAGEMENT AMONGST THE BANKS WITH SPECIAL REFERENCE TO MUMBAI CITY

Abstract

The banking industry's technical innovations for the convenience of its clients are demonstrated by the explosive rise of online banking in our nation. However, because of lack of internal control and administration, the growth in online transactions has also coincided with an increase in fraudulent activity. Banks must use strong risk management procedures and forensic accounting in order to fight fraud. A combination of criminology, auditing, law, and investigation, forensic accounting serves as a tool for fraud detection and prevention, legal evidence production, and regulatory compliance. Financial statement analysis, transaction tracking, data analysis, and internal audits are just a few of the techniques forensic accountants employ to find evidence of fraud. It was found that Staff rotation, red flags, database management systems, data analysis tools, and recurring internal audits are examples of risk management techniques used by banks. These steps are crucial for creating a preventive fraud environment and reducing operational, credit, and market risks. Because it can lessen and even eliminate financial scams, forensic accounting is important in the banking industry because it boosts stakeholder confidence. There are theories that point to forensic accounting as a means of reducing risk and low employee knowledge. Using primary data from Mumbai banks staff and secondary data from various publications, the research employed a descriptive methodology to explore how banks use forensic accounting (FA) procedures to control risk. The researchers suggested that enhancing creditworthiness checks, upgrading software, making sure data backups are made, using forensic accounting, and hiring cybersecurity specialists is important. Furthermore, a forensic accounting cell should be established by the RBI and SEBI, and forensic accountants should be required to be employed by banks. By putting these strategies into practice, banks can lower their Non-Performing Assets (NPAs) and improve their general accountability and integrity, which will stop fraud.