BUSINESS & FINANCE
RBI had cautioned banks multiple times on SWIFT misuse: Government
The RBI had issued two circulars in 2016 to banks on strengthening the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system, the misuse of which was unveiled last month in the Rs 12,600 crore fraud on state-run Punjab National Bank (PNB), Parliament was informed on Tuesday.
Apart from diamantaire Nirav Modi and his uncle Mehul Choksi, some PNB employees have been accused of misusing their access to the bank's SWIFT electronic messaging system used for overseas funds transfers. None of the fraudulent transactions were registered on the bank's internal transaction messaging system, the Core Banking Solution (CBS), enabling the fraud to go undetected for long.
"Reserve Bank of India (RBI) has apprised that it had issued two circulars to banks in the months of August and November 2016, related to security and operational controls in the SWIFT environment," Minister of State for Finance Shiv Pratap Shukla told the Rajya Sabha in a written reply.
"As per RBI inputs, compliance with RBI's instructions is the bank's responsibility and the Compliance Officer in the bank monitors the same."
"The RBI monitors compliance to its instructions on an ongoing basis and during RBI inspections and, where necessary, enforcement action is also initiated," he said.
After the unearthing of the PNB scam, an RBI notification last month said: "The risks arising from the potential malicious use of the SWIFT infrastructure has always been a component of their operational risk profile. RBI had, therefore, confidentially cautioned and alerted banks of such possible misuse."
Noting that the RBI has instructed banks to "strengthen their SWIFT operating environment", Shukla said the central bank has also constituted an expert committee to look into factors "leading to increasing incidence of frauds in banks and the measures (including information technology interventions) needed to curb and prevent it, and the role and effectiveness of various types of audits conducted in banks in mitigating the incidence of such frauds".
The RBI has taken other fraud-control measures like bringing out a framework for dealing with loan frauds above Rs 50 crore, creating an online Central Fraud Registry, issuing caution advices detailing names of fraudsters and their modus operandi and ordering banks to re-verify the title deeds for all credit exposures above Rs 5 crore.
The central bank has also mandated commercial banks to put in place adequate audit and compliance mechanisms with bank board-level reporting through the audit committee of the board, the minister added.
- Bank Of Maharashtra CMD arrested in Rs 3,000 cr fake loans case 20 Jun 2018 | IANS
- Markets open on a higher note on Wednesday 20 Jun 2018 | IANS
- RBI revises upwards housing loan limits under priority sector 19 Jun 2018 | PTI
- Deposits in PSU banks 100% safe and secure, says Finance Minister 19 Jun 2018 | PTI
- India has potential to become a $10 tn economy by 2030: Official 19 Jun 2018 | IANS
- Infosys sets up digital centre of excellence in Marseille 19 Jun 2018 | PTI
- IIT (BHU) signs MoU with Amazon Web Services Education program 19 Jun 2018 | PTI
- Weak global cues subdue equity indices; Sensex down over 200 points 19 Jun 2018 | IANS
- Myntra bets big on 'kirana' stores for last-mile delivery 18 Jun 2018 | PTI
- Jaitley, senior ministers discuss Air India's future course 18 Jun 2018 | PTI
Sunday EditionView All
17 Jun 2018 | VR Jayaraj | Kochi
In a swift move intended at stemming the protests brewing in the State police force against certain top officials’ ‘feudalistic’ practice of persecuting policemen and camp followers by using them as house servants, the Kerala Government on Saturday removed ADGP Sudesh Kumar, whose daughter was the other day booked for assaulting and verbally abusing his official police driver, from the position of head of the Armed Police Battalion. The action against...
STATE EDITIONSView All
20 Jun 2018 | PNS | Kochi
Mother of PR dept Addl Director passes away Late Laxmibai Gupta, mother of Suresh Gupta, the Additional Director, Public Relations Department passed away here on Tuesday. She was ill for last 15 days and left for heavenly abode at the age of 91 years at Bhopal on Tuesday morning...