Types of cyber crime

Cyber-Crime ('computer crime') is any illegal behaviour directed by means of electronic operations that targets the security of computer systems and the data processed by them. In a wider sense, 'computer - related crime' can be any illegal behavior committed by means of, or in relation to, a computer system or network; however, this is not cyber-crime. The United Nations has categorized five offenses as cyber-crime: unauthorized access, damage to computer data or programs, sabotage to hinder the functioning of a computer system or network, unauthorized interception of data to, from and within a system or network, and computer espionage. The categories of cyber-crime are: Financial - crimes which disrupt businesses' ability to conduct 'e-commerce' (or electronic commerce). Piracy - the act of copying copyrighted material. The personal computer and the Internet both offer new mediums for committing an 'old' crime. Online theft is defined as any type of 'piracy' that involves the use of the Internet to market or distribute creative works protected by copyright. Hacking - the act of gaining unauthorized access to a computer system or network and in some cases making unauthorized use of this access. Hacking is also the act by which other forms of cyber-crime (e.g., fraud, terrorism, etc.) are committed. Cyber-terrorism - the effect of acts of hacking designed to cause terror. Like conventional terrorism, `e-terrorism' is classified as such if the result of hacking is to cause violence against persons or property, or at least cause enough harm to generate fear. Online Pornography - There are laws against possessing or distributing child pornography. Distributing pornography of any form to a minor is illegal. The Internet is merely a new medium for this `old' crime, but how best to regulate this global medium of communication across international boundaries and age groups has sparked a great deal of controversy and debate. In Schools - While the Internet can be a unique educational and recreational resource for students, it is important that they are educated about how to safely and responsibly use this powerful tool. The founding goal of B4USurf is to encourage empowering the young through knowledge of the law, their rights, and how best to prevent misuse of the Internet.

TYPES OF CYBERCRIME
Financial

Public confidence in the security of information processed and stored on computer networks and a predictable environment of strong deterrence for computer crime is critical to the development of e-commerce, or commercial transactions online. Companies' ability to participate in ecommerce depends heavily on their ability to minimize e-risk. Risks in the world of electronic transactions online include viruses, cyber attacks (or distributed denial of service (DDOS) attacks) such as those which were able to bring Yahoo, eBay and other websites to a halt in February 2000, and e-forgery. There also have been other highly publicized problems of 'e-fraud' and theft of proprietary information and in some cases even for ransom ('e-extortion'). Piracy

The software industry plays a leading role in creating products that have vastly improved our lives and work environment. Unfortunately, software theft, or piracy, has had a negative impact on the global marketplace and the ability to create new products. Copying in the workplace, counterfeiting and various forms of illegal distribution cost the Asia Pacific region US$11.6 billion in 2006 (Fourth Annual BSA and IDC Global Software Piracy Study. This study covers all packaged software that runs on personal computers, including desktops, laptops, and ultraportables, including operating systems, systems software such as databases and security packages, business applications, and consumer applications such as PC games, personal finance, and reference software. The study does not include other types of software such as that which runs on servers or mainframes or software sold as a service.). Furthermore, the unauthorized electronic distribution and sale of copyrighted works over the Internet threatens to make these problems seem almost quaint by comparison. Legal and cultural frameworks to protect creative works online, including computer software, must be identified and built to encourage creativity and growth. Hacking

Modern-day graffiti has moved beyond scribbles on monuments and subway cars and now takes the form of defacing websites. This may be done for personal notoriety, the challenge, or a political message just as with traditional defacement of property, but this new form of exploit is no joking matter. In addition to the obvious economic threats of hacking there is also real physical danger which can be caused by hacking into computer networks. Cyber-Terrorism

Cyber-terrorism is distinguished from other acts of commercial crime or incidents of hacking by its severity. Attacks against computer networks or the information stored therein which result in "violence against persons or property, or at least cause enough harm to generate fear" are to be considered cyber-terrorism attacks according to congressional testimony from Georgetown University professor Dorothy Denning. "Attacks that disrupt nonessential services or that are mainly a costly nuisance" are not classified as cyber-terrorist attacks by her definition. Pornography

Youths' exposure to pornography while online has become a hot topic with various familyoriented groups seeking to prevent the young's access to such sites. In Schools

While the Internet can be a unique educational and recreational resource for students, it is important that they are educated about how to safely and responsibly use this powerful tool. Several issues have received particular attention with respect to protecting the young online. Educators should be aware of cyberstalking and the threats that online predators pose to their students' physical safety; harmful or inappropriate content (most often characterized as pornographic, excessively violent or simply 'adult'); privacy invasions that result from the collection of personally identifiable information; and commercialism and aggressive marketing targeted directly at the young. Another issue related to the presence of the young on the Internet is the potential misuse of this tool. Whether the consequences are intentional or unintentional, the Internet can open a dangerous window of accessibility for the young who are unaware of the consequences of irresponsible use. For this reason, it is essential that educators consider how to educate their students about the consequences associated with misusing the Internet.

Types of cyber crime

Cyber Stalking What is Cyber Stalking? Cyber Stalking can be defined as the repeated acts harassment or threatening behavior of the cyber criminal towards the victim by using Internet services.

Stalking in General terms can be referred to as the repeated acts of harassment targeting the victim such as 1. 2. 3. 4. 5. Following the victim Making harassing phone calls Killing the victims pet Vandalizing victims property Leaving written messages or objects

Stalking may be followed by serious violent acts such as physical harm to the victim and the same has to be treated and viewed seriously. It all depends on the course of conduct of the stalker. Cyber-stalking refers to the use of the Internet, e-mail, or other electronic communications device to stalk another person. It is a relatively new form of harassment, unfortunately, rising to alarming levels especially in big cities like Mumbai. Who is a cyber stalker? A cyber stalker sends harassing or threatening electronic communication to the victim. Both kinds of stalkers online and offline - have desire to control the victims life. How does a cyber stalker operate? 1. A typical cyber stalker collects all personal information about the victim such as name, family background, telephone numbers of residence and work place, daily routine of the victim, address of residence and place of work, date of birth etc. If the stalker is the victims acquaintances, he/ she has easy access to this information. If the stalker is a stranger, he/ she collects the information from internet resources such as various profiles, the victim may have filled in while opening chat or e-mail accounts or while signing an account with some website. 2. The stalker may post this information on any website related to sex-services or dating services, posing as if the victim is posting this information and invite the people to call the victim on her telephone numbers to have sexual services. A stalker even uses very filthy and obscene language to invite the interested persons. 3. People of all kind from nook and corner of the World, who come across this information, start calling the victim at her residence and/or work place, asking for sexual services or relationships. 4. Some stalkers subscribe the e-mail account of the victim to innumerable pornographic and sex sites, because of which victim starts receiving such kind of unsolicited e-mails. 5. Some stalkers keep on sending repeated e-mails asking for various kinds of favors or threaten the victim. 6. The stalkers follow their victim from message board to message board. They "hangout" on the same boards as their victim, many times posting notes to the victim, making sure the victim is aware that he/she is being followed. Many times they will "flame" their victim (becoming argumentative, insulting) to get their attention.

7. Stalkers will almost always make contact with their victims through email. The letters may be loving, threatening, or sexually explicit. They will many times use multiple names when contacting the victim. 8. In extreme cases, the stalker becomes bold enough to contact victim via telephone to make calls to the victim to threaten, harass, or intimidate him/ her. Ultimately, the stalker is even known to track the victim to his/ her home. When does cyber stalking happen? In many cases, the cyber stalker and the victim had a prior relationship, and the cyber stalking begins when the victim attempts to break off the relationship. However, there also have been many instances of cyber stalking by strangers. Given the enormous amount of personal information available through the Internet, a cyber stalker can easily locate private information about a potential victim with a few mouse clicks or keystrokes. The fact that cyber stalking does not involve physical contact may create the misperception that it is more benign than physical stalking. This is not necessarily true. As the Internet becomes an ever more integral part of our personal and professional lives, stalkers can take advantage of the ease of communications as well as increased access to personal information. In addition, the ease of use and non-confrontational, impersonal, and sometimes anonymous nature of Internet communications may remove disincentives to cyber stalking. Put another way, whereas a potential stalker may be unwilling or unable to confront a victim in person or on the telephone, he or she may have little hesitation sending harassing or threatening electronic communications to a victim. Finally, as with physical stalking, online harassment and threats may be a prelude to more serious behavior, including physical violence.

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Online Fraud

The net is a boon for people to conduct business effectively, very quickly. It saves businesses a lot of time, money and resources. Unfortunately, the net is also an open invitation to scamsters and fraudsters and online frauds are becoming increasingly rampant. Spoof websites and email security alerts Fraudsters create authentic looking websites that are actually nothing but a spoof. The purpose of these websites is to make the user enter personal information. This information is then used to access business and bank accounts. Fraudsters are increasingly turning to email to generate traffic to these websites.

A lot of customers of financial institutions recently received such emails. Such emails usually contain a link to a spoof website and mislead users to enter User ids and passwords on the pretence that security details can be updated, or passwords changed. If you ever get an email containing an embedded link, and a request for you to enter secret details, treat it as suspicious. Do not input any sensitive information that might help provide access to your accounts, even if the page appears legitimate. No reputable company ever sends emails of this type. Virus hoax emails It is a sad fact of life that there are those who enjoy exploiting the concerns of others. Many emailed warnings about viruses are hoaxes, designed purely to cause concern and disrupt businesses. These warnings may be genuine, so don't take them lightly, but always check the story out by visiting an anti-virus site such as McAfee, Sophos or Symantec before taking any action, including forwarding them to friends and colleagues. Lottery Frauds These are letters or emails, which inform the recipient that he/ she has won a prize in a lottery. To get the money, the recipient has to reply. After which another mail is received asking for bank details so that the money can be directly transferred. The email also asks for a processing fee/ handling fee. Of course, the money is never transferred in this case, the processing fee is swindled and the banking details are used for other frauds and scams. Spoofing Spoofing means illegal intrusion, posing as a genuine user. A hacker logs-in to a computer illegally, using a different identity than his own. He is able to do this by having previously obtained actual password. He creates a new identity by fooling the computer into thinking he is the genuine system operator. The hacker then takes control of the system. He can commit innumerable number of frauds using this false identity. 3Spoofing

(Illegal intrusion, posing as a genuine user)

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Spoofing means a hacker logs-in to a computer illegally using a different identity than his own. He is able to do this by having previously obtained actual password. He creates a new identity by fooling the computer into thinking he is the genuine system operator. Hacker then takes control of the system.

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Denial of Service

What is denial of service? This is an act by a criminal, who floods the bandwidth of the victims network or fills his e-mail box with spam mail depriving him of the services he is entitled to access or provide. This act is committed by a technique called spoofing and buffer overflow. The criminal spoofs the IP address and flood the network of the victim with repeated requests. Since the IP address is fake, the victim machine keeps waiting for response from the criminals machine for each request. This consumes the bandwidth of the network which then fails to serve the legitimate requests and ultimately breaks down.
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5Pornography Child Pornography Child pornography is a very unfortunate reality of the Internet. The Internet is being highly used by its abusers to reach and abuse children sexually, worldwide. The Internet is very fast becoming a household commodity in India. Its explosion has made the children a viable victim to the cyber crime. As more homes have access to Internet, more children would be using the Internet and more are the chances of falling victim to the aggression of pedophiles. What is Child Pornography? Child pornography means any visual depiction, including 1. any photograph 2. film, video, picture, or 3. computer or computer-generated image or picture, of sexually explicit conduct, where the production of such visual depiction involves the use of a minor engaging in sexually explicit conduct Who are Pedophiles? Pedophiles are those persons who physically or psychologically coerce minors to engage in sexual activities, which the minors would not consciously consent to. How pedophiles operate? 1. Pedophiles use a false identity to trap the children/teenagers 2. Seek child/teen victim in the kids areas on the services, such as the Teens BB, Games BB, or chat areas where the kids gather.

3. Befriend the child/teen. 4. Extract personal information from the child/teen by winning his/ her confidence. 5. Get the e-mail address of the child/teen and start making contacts on the victims e-mail address as well. Sometimes, these emails contain sexually explicit language. 6. They start sending pornographic images/text to the victim including child pornographic images in order to help child/teen shed his/ her inhibitions so that a feeling is created in the mind of the victim that what is being fed to him is normal and that everybody does it. 7. Going a step further, they then extract personal information from child/teen. 8. At the end of it, the pedophiles set up a meeting with the child/teen out of the house and then drag him/ her into the net to further sexually assault him/ her or to use him/ her as a sex object In physical world, parents know the face of dangers and they know how to avoid and face the problems by following simple rules and accordingly they advice their children to keep away from dangerous things and ways. But in case of cyber world, most of the parents do not themselves know about the basics of the Internet and dangers posed by various services offered over the Internet. Hence the children are left unprotected in the cyber world. Pedophiles take advantage of this situation and lure the children, who are not advised by their parents or by their teachers about what is wrong and what is right for them while browsing the Internet. 6Usenet Newsgroup

(Usenet is a popular means of sharing and distributing information on the web with respect to specific topic or subjects)
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Possible Criminal Uses of Usenet Distribution/Sale of pornographic material. Distribution/Sale of pirated softwares Distribution of Hacking Software Sale of Stolen credit card numbers Sale of Stolen Data/Stolen property Hackers

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Hacking in simple terms means illegal intrusion into a computer system without the permission of the computer owner/user. Purposes of hacking
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Greed Power Publicity Revenge

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Adventure Desire to access forbidden information Destructive mindset

Every act committed towards breaking into a computer and/or network is hacking. Hackers write or use ready-made computer programs to attack the target computer. They possess the desire to destruct and they get the kick out of such destruction. Some hackers hack for personal monetary gains, such as to stealing the credit card information, transferring money from various bank accounts to their own account followed by withdrawal of money. They extort money from some corporate giant threatening him to publish the stolen information, which is critical in nature. Government websites are the hot targets of the hackers due to the press coverage they receive. About Hackers, Crackers and Phreaks The original meaning of the word "hack" was born at MIT, and originally meant an elegant, witty or inspired way of doing almost anything. Now the meaning has changed to become something associated with the breaking into or harming of any kind of computer or telecommunications system. Purists claim that those who break into computer systems should be properly called "crackers" and those targeting phones should be known as "phreaks". 8Software Piracy

Beware! That pirated software CD which you bought for a couple of hundred bucks may have saved you some moneybut in the long run, it can do a lot more harm to you than good. Do you know that by buying such pirated software, you maybe aiding and abetting crime? What is software piracy? Theft of software through the illegal copying of genuine programs or the counterfeiting and distribution of products intended to pass for the original is termed as termed as software piracy. Examples of software piracy 1. End user copying - Friends loaning disks to each other, or organizations underreporting the number of software installations they have made. 2. Hard disk loading Hard disk vendors loads pirated software 3. Counterfeiting - large-scale duplication and distribution of illegally copied software. 4. Illegal downloads from the Internet - By intrusion, cracking serial numbers etc. A consumer of pirated software has a lot to lose
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He gets untested software that may have been copied thousands of times over, potentially containing hard-drive-infecting viruses

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No technical support in case of software failure No warranty protection No legal right to use the product Virus Dissemination

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What is a computer Virus? A computer virus is a program that can infect other legitimate programs by modifying them to include a possibly evolved copy of itself. Viruses can spread themselves, without the knowledge or permission of the users, to potentially large numbers of programs on many machines. A computer virus passes from computer to computer like a biological virus passes from person to person. Viruses can also contain instructions that cause damage or annoyance; the combination of possibly damaging code with the ability to spread is what makes viruses a considerable concern. How do viruses spread? Viruses can often spread without any readily visible symptoms. A virus can start on event-driven effects (for example, triggered after a specific number of executions), time-driven effects (triggered on a specific date, such as Friday the 13th) or can occur at random. Typical action of a virus 1. 2. 3. 4. 5. 6. Display a message to prompt an action which may set of the virus Erase files Scramble data on a hard disk Cause erratic screen behavior Halt the PC Just replicate itself!

BANKING SECTOR
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:
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A central bank circulates money on behalf of a government and acts as its monetary authority by implementing monetary policy, which regulates the money supply. A commercial bank accepts deposits and pools those funds to provide credit, either directly by lending, or indirectly by investing through the capital markets. Within the global financial markets, these institutions connect market participants with capital deficits (borrowers) to market participants with capital surpluses (investors and lenders) by transferring funds from those parties who have surplus funds to invest (financial assets) to those parties who borrow funds to invest in real assets. A savings bank (known as a "building society" in the United Kingdom) is similar to a savings and loan association (S&L). They can either be stockholder owned or mutually

owned, in which case they are permitted to only borrow from members of the financial cooperative. The asset structure of savings banks and savings and loan associations is similar, with residential mortgage loans providing the principal assets of the institution's portfolio. Because of the important role depository institutions play in the financial system, the banking industry is highly regulated, and government restrictions on financial activities by banks have varied over time and by location. Current global bank capital requirements are referred to as Basel II. In some countries, such as Germany, banks have historically owned major stakes in industrial companies, while in other countries, such as the United States, banks have traditionally been prohibited from owning non-financial companies. In Japan, banks are usually the nexus of a cross-share holding entity known as the "keiretsu". In Iceland, banks followed international standards of regulation prior to the recent global financial crisis that began in 2007. The oldest bank still in existence is Monte dei Paschi di Siena, headquartered in Siena, Italy, which has been operating continuously since 1472.[1]

INTRODUCTION
The banking section will navigate through all the aspects of the Banking System in India. It will discuss upon the matters with the birth of the banking concept in the country to new players adding their names in the industry in coming few years. The banker of all banks, Reserve Bank of India (RBI), the Indian Banks Association (IBA) and top 20 banks like IDBI, HSBC, ICICI, ABN AMRO, etc. has been well defined under three separate heads with one page dedicated to each bank. However, in the introduction part of the entire banking cosmos, the past has been well explained under three different heads namely:
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History of Banking in India Nationalisation of Banks in India Scheduled Commercial Banks in India

The first deals with the history part since the dawn of banking system in India. Government took major step in the 1969 to put the banking sector into systems and it nationalised 14 private banks in the mentioned year. This has been elaborated in Nationalisationof Banks in India. The last but not the least explains about the scheduled and unscheduled banks in India. Section 42 (6) (a) of RBI Act 1934 lays down the condition of scheduled commercial banks. The description along with a list of scheduled commercial banks are given on this page.

BANKS IN INDIA
In India the banks are being segregated in different groups. Each group has their own benefits and limitations in operating in India. Each has their own dedicated target market. Few of them only work in rural sector while others in both rural as well as urban. Many even are only catering in cities. Some are

of Indian origin and some are foreign players. All these details and many more is discussed over here. The banks and its relation with the customers, their mode of operation, the names of banks under different groups and other such useful informations are talked about. One more section has been taken note of is the upcoming foreign banks in India. The RBI has shown certain interest to involve more of foreign banks than the existing one recently. This step has paved a way for few more foreign banks to start business in India.

BANKING SERVICES IN INDIA

With years, banks are also adding services to their customers. The Indian banking industry is passing through a phase of customers market. The customers have more choices in choosing their banks. A competition has been established within the banks operating in India. With stiff competition and advancement of technology, the services provided by banks has become more easy and convenient. The past days are witness to an hour wait before withdrawing cash from accounts or a cheque from north of the country being cleared in one month in the south. This section of banking deals with the latest discovery in the banking instruments along with the polished version of their old systems. FINANCIAL AND BANKING SECTOR REFORMS

The last decade witnessed the maturity of India's financial markets. Since 1991, every governments of India took major steps in reforming the financial sector of the country. The important achievements in the following fields is discussed under serparate heads:
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Financial markets Regulators The banking system Non-banking finance companies The capital market Mutual funds Overall approach to reforms Deregulation of banking system Capital market developments Consolidation imperative

Now let us discuss each segment seperately. Financial Markets In the last decade, Private Sector Institutions played an important role. They grew rapidly in commercial banking and asset management business. With the openings in the insurance sector for these institutions, they started making debt in the market.

Competition among financial intermediaries gradually helped the interest rates to decline. Deregulation added to it. The real interest rate was maintained. The borrowers did not pay high price while depositors had incentives to save. It was something between the nominal rate of interest and the expected rate of inflation. Regulators The Finance Ministry continuously formulated major policies in the field of financial sector of the country. The Government accepted the important role of regulators. The Reserve Bank of India (RBI) has become more independant. Securities and Exchange Board of India (SEBI) and the Insurance Regulatory and Development Authority (IRDA) became important institutions. Opinions are also there that there should be a super-regulator for the financial services sector instead of multiplicity of regulators. The banking system Almost 80% of the business are still controlled by Public Sector Banks (PSBs). PSBs are still dominating the commercial banking system. Shares of the leading PSBs are already listed on the stock exchanges. The RBI has given licences to new private sector banks as part of the liberalisation process. The RBI has also been granting licences to industrial houses. Many banks are successfully running in the retail and consumer segments but are yet to deliver services to industrial finance, retail trade, small business and agricultural finance. The PSBs will play an important role in the industry due to its number of branches and foreign banks facing the constrait of limited number of branches. Hence, in order to achieve an efficient banking system, the onus is on the Government to encourage the PSBs to be run on professional lines. Development finance institutions FIs's access to SLR funds reduced. Now they have to approach the capital market for debt and equity funds. Convertibility clause no longer obligatory for assistance to corporates sanctioned by termlending institutions. Capital adequacy norms extended to financial institutions. DFIs such as IDBI and ICICI have entered other segments of financial services such as commercial banking, asset management and insurance through separate ventures. The move to universal banking has started. Non-banking finance companies

In the case of new NBFCs seeking registration with the RBI, the requirement of minimum net owned funds, has been raised to Rs.2 crores. Until recently, the money market in India was narrow and circumscribed by tight regulations over interest rates and participants. The secondary market was underdeveloped and lacked liquidity. Several measures have been initiated and include new money market instruments, strengthening of existing instruments and setting up of the Discount and Finance House of India (DFHI). The RBI conducts its sales of dated securities and treasury bills through its open market operations (OMO) window. Primary dealers bid for these securities and also trade in them. The DFHI is the principal agency for developing a secondary market for money market instruments and Government of India treasury bills. The RBI has introduced a liquidity adjustment facility (LAF) in which liquidity is injected through reverse repo auctions and liquidity is sucked out through repo auctions. On account of the substantial issue of government debt, the gilt- edged market occupies an important position in the financial set- up. The Securities Trading Corporation of India (STCI), which started operations in June 1994 has a mandate to develop the secondary market in government securities. Long-term debt market: The development of a long-term debt market is crucial to the financing of infrastructure. After bringing some order to the equity market, the SEBI has now decided to concentrate on the development of the debt market. Stamp duty is being withdrawn at the time of dematerialisation of debt instruments in order to encourage paperless trading. The capital market The number of shareholders in India is estimated at 25 million. However, only an estimated two lakh persons actively trade in stocks. There has been a dramatic improvement in the country's stock market trading infrastructure during the last few years. Expectations are that India will be an attractive emerging market with tremendous potential. Unfortunately, during recent times the stock markets have been constrained by some unsavoury developments, which has led to retail investors deserting the stock markets. Mutual funds The mutual funds industry is now regulated under the SEBI (Mutual Funds) Regulations, 1996 and amendments thereto. With the issuance of SEBI guidelines, the industry had a framework for the establishment of many more players, both Indian and foreign players. The Unit Trust of India remains easily the biggest mutual fund controlling a corpus of nearly Rs.70,000 crores, but its share is going down. The biggest shock to the mutual fund industry during recent times was the insecurity generated in the minds of investors regarding the US 64 scheme. With the growth in the securities markets and tax advantages granted for investment in

mutual fund units, mutual funds started becoming popular. The foreign owned AMCs are the ones which are now setting the pace for the industry. They are introducing new products, setting new standards of customer service, improving disclosure standards and experimenting with new types of distribution. The insurance industry is the latest to be thrown open to competition from the private sector including foreign players. Foreign companies can only enter joint ventures with Indian companies, with participation restricted to 26 per cent of equity. It is too early to conclude whether the erstwhile public sector monopolies will successfully be able to face up to the competition posed by the new players, but it can be expected that the customer will gain from improved service. The new players will need to bring in innovative products as well as fresh ideas on marketing and distribution, in order to improve the low per capita insurance coverage. Good regulation will, of course, be essential. Overall approach to reforms The last ten years have seen major improvements in the working of various financial market participants. The government and the regulatory authorities have followed a step-by-step approach, not a big bang one. The entry of foreign players has assisted in the introduction of international practices and systems. Technology developments have improved customer service. Some gaps however remain (for example: lack of an inter-bank interest rate benchmark, an active corporate debt market and a developed derivatives market). On the whole, the cumulative effect of the developments since 1991 has been quite encouraging. An indication of the strength of the reformed Indian financial system can be seen from the way India was not affected by the Southeast Asian crisis. However, financial liberalisation alone will not ensure stable economic growth. Some tough decisions still need to be taken. Without fiscal control, financial stability cannot be ensured. The fate of the Fiscal Responsibility Bill remains unknown and high fiscal deficits continue. In the case of financial institutions, the political and legal structures hve to ensure that borrowers repay on time the loans they have taken. The phenomenon of rich industrialists and bankrupt companies continues. Further, frauds cannot be totally prevented, even with the best of regulation. However, punishment has to follow crime, which is often not the case in India. Deregulation of banking system Prudential norms were introduced for income recognition, asset classification, provisioning for delinquent loans and for capital adequacy. In order to reach the stipulated capital adequacy norms, substantial capital were provided by the Government to PSBs. Government pre-emption of banks' resources through statutory liquidity ratio (SLR) and cash reserve ratio (CRR) brought down in steps. Interest rates on the deposits and lending sides almost entirely were deregulated.

New private sector banks allowed to promote and encourage competition. PSBs were encouraged to approach the public for raising resources. Recovery of debts due to banks and the Financial Institutions Act, 1993 was passed, and special recovery tribunals set up to facilitate quicker recovery of loan arrears. Bank lending norms liberalised and a loan system to ensure better control over credit introduced. Banks asked to set up asset liability management (ALM) systems. RBI guidelines issued for risk management systems in banks encompassing credit, market and operational risks. A credit information bureau being established to identify bad risks. Derivative products such as forward rate agreements (FRAs) and interest rate swaps (IRSs) introduced. Capital market developments The Capital Issues (Control) Act, 1947, repealed, office of the Controller of Capital Issues were abolished and the initial share pricing were decontrolled. SEBI, the capital market regulator was established in 1992. Foreign institutional investors (FIIs) were allowed to invest in Indian capital markets after registration with the SEBI. Indian companies were permitted to access international capital markets through euro issues. The National Stock Exchange (NSE), with nationwide stock trading and electronic display, clearing and settlement facilities was established. Several local stock exchanges changed over from floor based trading to screen based trading. Private mutual funds permitted The Depositories Act had given a legal framework for the establishment of depositories to record ownership deals in book entry form. Dematerialisation of stocks encouraged paperless trading. Companies were required to disclose all material facts and specific risk factors associated with their projects while making public issues. To reduce the cost of issue, underwriting by the issuer were made optional, subject to conditions. The practice of making preferential allotment of shares at prices unrelated to the prevailing market prices stopped and fresh guidelines were issued by SEBI. SEBI reconstituted governing boards of the stock exchanges, introduced capital adequacy norms for brokers, and made rules for making client or broker relationship more transparent which included separation of client and broker accounts. Buy back of shares allowed The SEBI started insisting on greater corporate disclosures. Steps were taken to improve corporate governance based on the report of a committee.

SEBI issued detailed employee stock option scheme and employee stock purchase scheme for listed companies. Standard denomination for equity shares of Rs. 10 and Rs. 100 were abolished. Companies given the freedom to issue dematerialised shares in any denomination. Derivatives trading starts with index options and futures. A system of rolling settlements introduced. SEBI empowered to register and regulate venture capital funds. The SEBI (Credit Rating Agencies) Regulations, 1999 issued for regulating new credit rating agencies as well as introducing a code of conduct for all credit rating agencies operating in India. Consolidation imperative Another aspect of the financial sector reforms in India is the consolidation of existing institutions which is especially applicable to the commercial banks. In India the banks are in huge quantity. First, there is no need for 27 PSBs with branches all over India. A number of them can be merged. The merger of Punjab National Bank and New Bank of India was a difficult one, but the situation is different now. No one expected so many employees to take voluntary retirement from PSBs, which at one time were much sought after jobs. Private sector banks will be self consolidated while co-operative and rural banks will be encouraged for consolidation, and anyway play only a niche role. In the case of insurance, the Life Insurance Corporation of India is a behemoth, while the four public sector general insurance companies will probably move towards consolidation with a bit of nudging. The UTI is yet again a big institution, even though facing difficult times, and most other public sector players are already exiting the mutual fund business. There are a number of small mutual fund players in the private sector, but the business being comparatively new for the private players, it will take some time. We finally come to convergence in the financial sector, the new buzzword internationally. Hitech and the need to meet increasing consumer needs is encouraging convergence, even though it has not always been a success till date. In India organisations such as IDBI, ICICI, HDFC and SBI are already trying to offer various services to the customer under one umbrella. This phenomenon is expected to grow rapidly in the coming years. Where mergers may not be possible, alliances between organisations may be effective. Various forms of bancassurance are being introduced, with the RBI having already come out with detailed guidelines for entry of banks into insurance. The LIC has bought into Corporation Bank in order to spread its insurance distribution network. Both banks and insurance companies have started entering the asset management business, as there is a great deal of synergy among these businesses. The pensions market is expected to open up fresh opportunities for insurance companies and mutual funds. It is not possible to play the role of the Oracle of Delphi when a vast nation like India is involved. However, a few trends are evident, and the coming decade should be as interesting as the last one.

EASY BANKING
This section is fully dedicated to the Tech Banking. A decade before, it was tough to belief that banking secctor will be at a finger tip. Now its possible. A mobile hand set with a connection is the only instrument needed to make a gateway to your banking transaction, the latest innovation of technology. Apart from the Mobile Banking, including of SMS Banking, Net Banking and ATMs are the major steps taken by the banks in India towards modernisation. With all these devises and systems, there is a complete freedom to experience. Check your account, transfer your fund, make payments and what more, do anything of everything what has been followed in physical banking since ages. But this time no standing for hours in front of cash counter and no time boundation in withdrawing your own money. BANKING SERVICES FOR NRI S

Almost all the Indian Banks provide services to the NRIs. There are different types of accounts for them. They are:
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Non-Resident (Ordinary) Account - NRO A/c Non-Resident (External) Rupee Account - NRE A/c Non-Resident (Foreign Currency) Account - FCNR A/c

An Indian resident who is earning forign exchange can also maintain Foreign Currency account in the country with an authorised dealer bank but only to the maximum limit of 50% of such foreign exchange earnings under the Exchange Earners Foreign Currency Account (EEFC) Scheme. Some of the FAQs given below will make it easy to understand the services provided by banks to the NRIs.

a. What are the special features of each bank account? The special features are as under: NRO A/c.: The funds, credited to this account, cannot be repatriated outside India in foreign exchange, without prior permission of the Reserve Bank of India. Interest, earned is eligible for repatriation outside India, net of Indian taxes. The remittance of interest (net of taxes) will be permitted by the authorised dealer who maintains the account, if the account holder makes an application to the authorised dealer, in the prescribed form. No RBI permission is required for remittance of interest. NRE A/c.: The funds, standing to the credit of this account, as well as interest earned thereon, are remittable outside India in free foreign exchange, without permission of the RBI. The interest income is not subject to Indian Income-tax. Credits to the accounts

should be in the form of remittance in foreign exchange from outside India, as well as other funds, which are eligible to be remitted outside India, in free foreign exchange. Funds, emanating from local sources, are not eligible to be credited to these accounts, unless these funds are otherwise remittable outside India, in terms of the existing Exchange Control Regulations. FCNR A/c.: These accounts can be opened in four foreign currencies: o Pounds Sterling; o US Dollars; o Japanese Yen; o Euro. For the purpose of opening an account, remittance in foreign exchange, in the same currency, should be received in India. The accounts can be opened only as fixed deposits, with a minimum maturity of one year and, a maximum maturity of three years. The principal, as well as interest, earned on these accounts, is remittable outside India, in the same currency or, in other convertible currency, as desired by the account holder. The interest, earned on these deposits, is exempt from Indian Income-tax. b. Can Non Resident accounts be opened/ operated by the Power of Attorney holder in India, on behalf of the non-resident? The accounts cannot be opened by the Power of Attorney holder in India. However, the latter can operate the accounts for the purpose of local payments to be made on behalf of the non-resident account holder. The Power of Attorney holder is not permitted to make gifts from these accounts and, is not allowed to make remittances outside India. c. What happens to the status of these accounts when the non-resident holder becomes a person, resident in India? The accounts are to be re-designed as resident accounts, when the non-resident account holder becomes a person, resident in India. In the case of fixed deposits opened by the account holder, before becoming resident in India, the contracted rate of interest will be paid till maturity of the deposits. Similarly, FCNR deposits will be eligible to be held in respective currencies till maturity of the deposits, even after the non-resident holder become a resident in India. He will, however, cease to get tax exemption on interest on the erstwhile deposits (NRE/FCNR deposits), after he becomes resident in India. In certain situations, it might be advisable for the account holder to convert the account to a Resident Foreign Currency Account Deposit (RFC) d. What are the various facilities available to NRIs/OCBs? The facilities available to NRIs/OCBs for making investment in India are as follows: o opening and maintenance of bank accounts in India;
o

investment in shares and securities of Indian companies, government securities, units of domestic mutual funds and ,deposits with Indian companies/firms;

o o

investment in immovable properties in India; investment in proprietorship/partnership concerns in India.

e. Are NRIs permitted to send remittances outside India out of the assets in India that are inherited by them? Yes. RBI will consider application from NRIs for remittance of assets, inherited by them in India. Such remittance may be permitted up to US$ 100,000 per year. f. Can a person of Indian origin acquire any immovable property in India by way of inheritance? A person of Indian origin, resident outside India, may acquire any immovable property in India by way of inheritance from a person, resident outside India, who had acquired such property in accordance with the provisions of foreign exchange law in force at the time of acquisition by him or the provisions of Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000. Immovable property, by way of inheritance, can also be acquired by a person of Indian origin resident outside from a person resident in India. g. Can NRIs and Overseas Corporate Bodies (OCBs) invest in India? The Government of India has adopted a liberal policy, with respect to investments by NRIs and OCBs in India. Such investments are allowed, both, through the RBI route and also through the Government route, i.e., through the Foreign Investment Promotion Board (FIPB) NRIs and OCBs are permitted to invest up to 100% equity in real estate development activity and civil aviation sectors. Investment, made by the NRIs and OCBs, are fully repatriable, except in the case of real estate, which has a 3 year lock-in period on original investment and, 16% cap on dividend repatriation. For those proposals that do not qualify under the automatic route, Government approval is granted through FIPB. h. What is the extent and application of Foreign Exchange Management Act (FEMA)? FEMA extends to the whole of India. It also applies to all branches, offices and agencies outside India, owned or controlled by a person, resident in India. It also applies to any contravention, there under, committed in or, outside India, by any person to whom the Act applies. i. What is the penalty for contravention of FEMA? Any person, contravening FEMA, shall be liable, upon adjudication, to a penalty up to three times the sum involved in such contravention, where such amount is quantifiable, or up to Rupees Two hundred thousand, where the amount is not quantifiable. In addition, where such contravention is a continuing one, the person will be liable to further penalty,

which may extend to Rupees Five thousand for every day after the first day, during which the contravention continues. j. Can a person of Indian origin resident outside India gift properties acquired earlier in terms of the provisions of FERA/FEMA? Yes. A person of Indian origin resident outside India may transfer residential or commercial property in India by way of gift to a person resident in India or to a person resident outside India who is a citizen of India or to a person of Indian origin resident outside India. A Person of Indian origin resident outside India may also transfer by way of gift agriculture land/farm house/plantation property in India to a person resident in India who is a citizen of India. k. Can an NRI account be opened in the name of crew members of shipping companies? Yes, if their posting is not based in India and they derive their income from other country in foreign currency.

INDIAN BANK ASSOCIATION

The Indian Banks Association (IBA) was formed on the 26th September, 1946 with 22 members. Today IBA has more than 156 members comprising of Public Sector banks, Private Sector banks, Foreign banks having offices in India, Urban Co-operative banks, Developmental financial institutions, Federations, merchant banks, mutual funds, housing finance corporations, etc. The functioning of IBA
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To promote sound and progressive banking principles and practices. To render assistance and to provide common services to members. To organise co-ordination and co-operation on procedural, legal, technical, administrative and professional matters. To collect, classify and circulate statistical and other information. To pool together expertise towards common purposes such as reduction in costs, increase in efficiency, productivity and improve systems, procedures and banking practices. To project good public image of banking through publicity and public relations

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PROXY BANKING IN INDIA

Indian villages were miles away from mutual funds, insurance and even equity trading. Thanks to Internet Kiosk and the ATM duo which has made it possible for rural India. This kiosk has

been set up by ICICI Bank in partnership with network n-Logue Communications in remote villages of Southern part of the country. This is known as Proxi Banking. With the help of fibre optic cables, this kiosk works on wireless in local loop technology. Reasons for setting-up of Proxi Banking
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58% of rural households still do not have bank accounts. Only 21% of rural households have access to credit from a formal source. 70% of marginal farmers do not have deposit account. 87% households have no formal credit. Only 1% rural househlods rely on a loan from a financial intermediary. The loans take between 24 to 33 weeks to get sanctioned. Consumers bribe officials to get loans approved which varies between 10 and 20 per cent of the loan amount. Branch banking in rurals is a loss-making.

Benefits to rurals
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Small loans given for buying buffaloes. Loans for setting up a tea shop. Life and non-life insurance provided. Weather insurance given to farmers. Insurance policies sold to farmers like groundnut, castor, soya, paddy crop, etc.

The Proxy Banking is an innovative approach to rural lending and will add to the government's expanding base of kisan credit cards and the good old guidelines for agricultural lending.