The Indian banking sector, governed by the Banking Regulation Act, 1949, has undergone significant transformations since independence, with evolving challenges necessitating stronger regulatory frameworks. This research examines the Act's relevance in the contemporary banking environment, highlighting the role of forensic audits in detecting and mitigating financial frauds. Through the analysis of high-profile cases such as the Punjab National Bank fraud, the IL&FS crisis, and the YES Bank collapse, the study underscores the critical need for robust internal controls, proactive regulatory oversight, and the enhancement of forensic audit practices. While forensic audits have proven effective in uncovering fraud, they face challenges such as resource intensity, legal delays, and difficulties in accessing information. To address these limitations, the research recommends mandatory forensic audits for large advances, periodic audits, improved coordination between regulators and auditors, and legal reforms to expedite proceedings and strengthen whistle-blower protections. These measures are essential for ensuring the stability and integrity of India's banking sector in the face of increasing financial complexities.