Fri. Mar 29th, 2024
RBI

The Reserve Bank of India fines at least 19 lenders for not complying with its guidelines on the use of banking messaging software-SWIFT. These banks included ICICI Bank and Fraud hit State Bank of India (SBI).

Swift which stands for Society for Worldwide Interbank Financial Telecommunications is a software used by financial entities for the secure transaction of messages and instruction using standard codes.

The strict stand of RBI over the compliance of guidelines regarding the Swift Software is the result of $2 billion fraud in Punjab National Bank (PNB) which was due to misuse of SWIFT software. The regulator has become more stringent and rigid over the compliance since the infamous PNB fraud.

“The series of fines imposed is a stern signal from RBI to banks to strengthen their internal systems and minimize fraud after the PNB fraud last year, which tarnished the image of India’s banking system,” said Mitul Budhbhatti, associate director and head of banking, financial services and insurance at CARE Ratings.

However, the fines are procedural and range between 1 crore to 4 crore and as per the exchange filing by the lender over the last 4 days, the penalties aggregate to about 40 crore.

After the infamous PNB fraud, the central government criticized the banking regulator for monitoring oversight. RBI after this issued various guidelines to banks on how to use SWIFT software. In its order the banks were also asked to connect their core banking system to SWIFT software by April 30 last year.

Most of the banks have complied with the guidelines but still there are few abbreviations which still need to be seen.

Earlier, Yes Bank on Yesterday said in a exchange filing that RBI has imposed 1 crore penalty on the lender over the non-compliance of guidelines on the SWIFT software. 

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