Authors: Deeksha Sharma,Kamlesh Rani,Dr.Annu Singh,BATTI Sandhya,Himanshu Kolte,Himanshu Kolte
Affiliation: Chaudhary Devi Lal University, Sirsa, Haryana,Guru Ghasidas Vishwavidyala Bilaspur
Abstract: The Indian banking sector, especially public sector banks (PSBs), has faced persistent challenges related to financial fraud, undermining institutional performance and public trust. This study investigates the impact of fraud on the financial performance of PSBs from 2017 to 2023, using secondary data from Rajya Sabha records and annual bank reports. Employing Ordinary Least Squares (OLS) regression, we analyze how the number of fraud cases (LNOF) and the amount involved in fraud (LAIF) influence Return on Assets (ROA), Return on Equity (ROE), and Deposits. Results indicate that while the frequency of fraud incidents is positively and significantly associated with bank performance metrics, the monetary value of fraud has a significantly negative impact on ROA and ROE. The findings underscore the dual challenge of fraud frequency and severity, with implications for internal controls, forensic auditing, and banking regulation. The study recommends proactive regulatory oversight, adoption of forensic accounting tools, and early fraud warning systems to enhance financial stability in the public banking sector.
Keywords: Forensic Accounting,Bank fraud,Financial performance,Public Sector banks
Vol & Issue: VOL.1, ISSUE No.1, June 2025