Anatomy of the Problem

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Role and importance of Commercial Banks

The functions of commercial banks explain their importance in the economic development of a country. Banks help in accelerating the economic growth of a country in the following ways
1. Accelerating the Rate of Capital Formation: Commercial banks encourage the habit of thrift and mobilise the savings of people. These savings are effectively allocated among the ultimate users of funds, ie, investors for productive investment. So, savings of people result in capital formation which forms the basis of economic development.
2. Provision of Finance and Credit: Commercial banks are a very important source of finance and credit for trade and industry. The activities of commercial banks are not only confined to domestic trade and commerce, but extend to foreign trade also.
3. Developing Entrepreneurship: Banks promote entrepreneurship by underwriting the shares of new and existing companies and granting assistance in promoting new venture or financing promotional activities. Banks finance sick (loss-making) industries for making them viable units.
4. Promoting Balanced Regional Development Commercial banks provide credit facilities to rural people by opening branches in the backward areas. The funds collected in developed regions may be channelised for investments in the underdeveloped regions of the country
In this way, they bring about more balanced regional development
5. Help to Consumers Commercial banks advance credit for purchase of douche items like Vehicles, T.V., refrigerator etc., which are out of reach for some consumers due in capacity. In this way, banks help in creating demand for such consumer goods
Strucure of Commercial Banks in India
The commercial banks can be broadly classified under two head:
1. Scheduled Banks: Scheduled Banks refer to those banks which have been included in the Second Schedule of Reserve Bank of India Act, 1934. In India, scheduled commercial banks are of three types:
(i) Public Sector Banks: These banks are owned and controlled by the government The main objective of these banks is to provide service to the society, not to make profits. State Bank of India, Bank of India, Punjab National Bank, Canara Bank and Corporation Bank are some examples of public sector banks. Public sector banks are of two types:
(a) SBI and its subsidiaries (b) Other nationalized banks
(ii)Private Sector Banks: These banks are owned and controlled by private businessmen Their main objective is to earn profits. ICICI Bank, HDFC Bank, IDBI Bank are someexamples of private sector banks.
(iii)Foreign Banks: These banks are owned and controlled by foreign promoters. Their number has grown rapidly since 1991, when the process of economic liberalization had started in India. Bank of America, American Express Bank, Standard Chartered Bank are examples of foreign banks 2 Non-Scheduled Banks:
Non-Scheduled banks refer to those banks which are not included in the Second Schedule of Reserve Bank of India Act, 1934.



The computer security breaches that included the much- debated distributed denial of service (DDoS) attacks, some of which were attributed to a
Canadian teen masquerading in cyberspace as “Mafiaboy,” the Philippinegenerated “Love Bug,” and the “Killer Resume” e- mail attacks that wreaked
havoc on world computer networks, were, in addition to being attentiongrabbing headlines, loud wake- up bells. Not only did these incidents expose
law enforcement agencies’ lack of expertise in digital forensics, they also alerted
a complacent society to the weaknesses in the computer network infrastructure, the poor state of the nation’s computer security preparedness, the little
knowledge many of us have about computer security and the lack of efforts to
secure computer system infrastructure at that time.1 They also highlighted
the vulnerability of cyberspace businesses including critical national infrastructures like power grids, water systems, financial institutions, communication systems, energy, public safety, and all other systems run by computers
that foreign governments or cyber terrorists could attack via the Internet.

In fact, the “Love Bug’s” near- lightning strike of global computers, its
capacity to penetrate the world’s powerful government institutions with
impunity, though by its very origin very unsophisticated, and the easy and
rapid spread of the “Killer Resume” virus, although it attacked during off- peak
hours, showed how easy it was and still is to bring the world’s computer infrastructure and all that depend on it to a screeching stop. They also demonstrated
how the world’s computer networks are at the mercy of not only affluent preteens and teens, as in the case of Mafiaboy, but also of the not so affluent, as
in the case of the Philippine “Love Bug” creator. With national critical systems
on the line, sabotage should no longer be expected to come from only known
high- tech and rich countries but from anywhere, the ghettos of Manila and
the jungles of the Amazon included.

As computer know- how and use spreads around the world, so do the dangers of computer attacks. How on earth did we come to this point? We are a
smart people that designed the computer, constructed the computer communication network, and developed the protocols to support computer communication, yet we cannot safeguard any of these jewels from attacks, misuse, and
abuse. One explanation might be rooted in the security flaws that exist in the
computer communication network infrastructures, especially the Internet.
Additional explanations might be: users’ and system administrators’ limited
knowledge of the infrastructure, society’s increasing dependence on a system
whose infrastructure and technology it least understands, lack of long- term
plans and mechanisms in place to educate the public, a highly complacent
society which still accords a “whiz kid” status to cyber vandals, inadequate
security mechanisms and solutions often involving no more than patching
loopholes after an attack has occurred, lack of knowledge concerning the price
of this escalating problem, the absence of mechanisms to enforce reporting of
computer crimes (which is as of now voluntary, sporadic, and haphazard), and
the fact that the nation has yet to understand the seriousness of cyber vandalism. A detailed discussion of these explanations follows.


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