Answers to shout-box queries – 11

Here go answers to some of the recent shout-box queries.

18 Jul 07, 13:42

vijay: sir, what is hawala, and what is the difference btn Money laundering and hawala?

Hawala may be used while laundering money; but hawla is not money laundering. It is completely different form of crime or doing business. Depends on how one looks at it.

Suppose you have a relative abroad. Let’s say US. You want to send him some dollars. But, for various reasons you find that it is not feasible for you to send him dollars from India. So, if you have another friend here in India who also has a friend or relative in US and if he can establish contact with your relative there you can do a hawala transaction and send him money. You give your local friend the equivalent of dollars (in rupees). Your local friend tells his relative/friend in the US to give that much money to your relative in dollars.

Money laundering is a totally different thing. You earn black money and you convert into white money. This is called money laundering. There are various methods in which this is done. People make use of the stock markets, fictitious transactions, insurance (as I noted earlier), real estate etc. Put simply, if you are bringing on books losses or profits which are not yours, as yours, you are indulging in money laundering.

18 Jul 07, 13:05

rishi raj: What is the meaning og "negative net worth" in connection to RRBs ?

Put simply, net worth means -- all the assets of the bank less its assets. If this figure is in the negative, that is a negative net worth. Suppose a bank has Rs. 100 crores in assets and Rs. 98 crores in liabilities. Its net worth is Rs. 2 crores. If you reverse the figures i.e., its assets being 98 crores and liabilities being Rs. 100 crores, the bank has a negative net worth of Rs. 2 crores.

18 Jul 07, 10:14

Suresh: what is web1.0 and web 2.0, what is the difference between these two

Web 2.0 is a term often applied to a perceived ongoing transition of the World Wide Web from a collection of websites to a full-fledged computing platform serving web applications to end users. Ultimately Web 2.0 services are expected to replace desktop computing applications for many purposes. Take a look at this: http://en.wikipedia.org/wiki/Web_2.0

Web 1.0 is nothing but what preceded this present transition. You can view it basically as an information provider. Web 2.0 is characterized by interactivity, user participation and ownership of content and data. Things like sending an SMS straight from a web site was not thinkable till a few years ago. Today’s web based applications which are able to guide users in traffic with a simple cell phone, guide cars through the traffic maze, monitor the movement of trucks, give information about any individual from anywhere in the world etc., are all manifestations of Web 2.0.

17 Jul 07, 19:44

Mukesh Kumar: what is hedge fund

A fund, usually used by wealthy individuals and institutions, which is allowed to use aggressive strategies that are unavailable to mutual funds, including selling short, leverage, program trading, swaps, arbitrage, and derivatives. Hedge funds are exempt from many of the rules and regulations governing other mutual funds, which allows them to accomplish aggressive investing goals. Generally hedge funds take a lot riskier investment strategies and are guided basically by profit motive rather than security motive. The people who invest in such funds have lot of appetite for risk.