Corruption in civilized society is disease like cancer which is not detected in time is sure to spread its malignance among the polity of the country leading to disastrous consequences. Corruption is opposite to democracy and social order and being of only anti-people but also due to fact that it effects the economy of a country and destroy its cultural heritage. It poses threat to the concept of constitutional governance and shakes the very foundation of democracy and rule of law. The purpose of this study is get rid from fraud and corruption committed by the criminals, outsiders customers and employees of the banks and financial institutions and other State, Central and Local bodies, public and private sectors. The detection of fraud and corruption has become a big problem. This phenomenon surprisingly is not limited to a particular area, city, or country. It is throughout the world. The word fraud is defined under Sec. 17 of the Indian Contract Act, 1872 and Forgery is defined under Sec.163 of the Indian Penal Code, 1860. The main objectives of this research paper are as under: To study the information’s of law relating to fraud and corruption in banks and financial institutions is essential. To examine the nature of evil of fraud and corruption in the banks and financial institutions which is increasing in spite of implementation of various law? To study dimensions of fraud and corruption in earlier and modern time. To identify and examine the role played by the C.B.I., Central Vigilance Commission, Police and other agencies with regard to fraud and corruption in the banks and financial institutions.. To study the law and policies in India for prevention of fraud and corruption in Banks and financial institutions. To study the need to strengthen and harmonize the law and policies regarding fraud and corruption in banks and financial institutions while ensuring its compliance with international law. The fraud, forgery and corruption is commonly found in exchange of services rely on Information and Technology and the absence of physical bank branches to provide these services to the customers. There is great increase in E-banking and M-banking. The virtual banking becomes very popular amongst the customers due to speed, convenience and round-the-clock access. The Information Technology Act, 2000 has been passed by the parliament which gives recognition to the transitions undertaken through computer system and internet. Frauds and corruption are on increase. Some of the reasons are: speedily expansions of foreign and private banks i.e., increase of number of branches, increase in volume of business, increase inn number of employees, number of customers and spread of operations. These are the contributing factors to the higher incidence of banks frauds and forgeries.