The phenomena of default loans, mismanagement, irregularities, forgery and embezzlement has been going up due to the uninterrupted vicious trend of plundering at random the banking sector. If the banking sector fails to gain reliability and belief, then economy will an unfavorable situation. The tendency of being default loan after taking loan from banks through false statement and forgery should be nipped in the bud. Banks usually provide advances through collecting deposits and then make profits from it Bank will lend obviously. But Banks should ha to be cautious so that the given loans will be turned into bad loans.