Idea OF Giving Licenses to Corporate Houses For Setting New Banks

'New banks at high risk of frauds'
CHENNAI: The casual way in which bank officials deal with passwords of files containing key information makes it easier for criminals, a meeting of bankers and cyber crime investigators was told here on Saturday. 

Ashok Kumar, additional director-general in charge of economic offences prevention, government of India, said officials often left behind files opened with passwords when they took a break. 

Coming down heavily on other safety loopholes in banking networks as well, Kumar said there had been a series of economic crimes in different sectors in the country in the recent past. 

According to crime data compiled by the criminology department of the University of Madras, 400 bank fraud cases were reported in Tamil Nadu during 2006-11. 

Of these, 322 were in Chennai. However, the number of cases came down from 77 in 2006 to 47 in 2011. 

Leading institutions, including the Bank of Baroda, Canara Bank, ICICI, Indian Bank, Indian Overseas Bank, State Bank of India, Syndicate Bank and the Union Bank of India, have reported a considerable number of banking frauds. V Rajendran, a senior advocate and cyber law consultant, said new generation banks were at high risk of such frauds. "Compared to public sector banks that already have fraud-preventing measures in their electronic data management systems, new generation banks remain far behind. Many such banks are still maintaining a very fluid security mechanism where decisions regarding the data management, privacy and classification are taken by single individuals or without standardized norms," he said. 
Experts also said that more than a decade since electronic data services were introduced, no electronic record maintenance policy was in place. "When we seek data of a particular account or a series of transactions from new generation banks, they are unable to do so, citing a variety of reasons," said a senior CBI officer. 

While most countries have an electronic communication act and data privacy act to deal with online frauds and ensure the safety of the customer, here everything comes under an Information Technology Act unable to handle new forms of white collar crimes, some said. 

"Regulatory mechanisms, including data-record maintenance policies suggested by the RBI are not being followed by many banks, making investigation of bank frauds difficult," said a senior police officer of the economic offences wing

http://timesofindia.indiatimes.com/city/chennai/New-banks-at-high-risk-of-frauds/articleshow/17906868.cms