RBI Imposes Penalties On 36 Big Banks For Non-Compliance In SWIFT Operations

The Reserve Bank of India (RBI) informed on Friday that it has imposed penalties worth Rs 71 crore on 36 public, private and foreign banks for not complying with various directions to carry out SWIFT operations.

SWIFT is an international messaging software used by banks all over the world to send and receive information on financial transactions in a secure and reliable way. The country's biggest fraud worth Rs 14,000 crore at the Punjab National Bank was made by misusing this software.

In a statement, RBI said that the penalties range from Rs 1 crore to Rs 4 crore and were imposed by orders dated 31 January 2019 and 25 February 2019.

It further clarified that the penalties were in relation to the deficiency in complying with the regulations and "is not intended" to state that the transaction or agreement agreed to by the banks with their customers is in any way invalid.

The Central Bank had conducted an assessment of 50 major banks to check if they are complying with its directions on implementation and strengthening of SWIFT-related operational controls. It revealed one or more of the major direction pertaining to direct creation of payment messages in the SWIFT environment and introduction of an additional layer of approval for all payment messages exceeding a particular threshold, among others, were not complied with.

Based on the extent of non-compliance, notices (SCNs) were issued to 49 banks asking a show cause as to why the penalty should not be imposed for their said non-compliance.

"After considering the replies received from the banks, oral submissions made in the personal hearings where sought by the banks, and examination of additional submissions, if any, RBI decided to impose monetary penalty on aforementioned 36 banks, based on the extent of non-compliance in each bank," RBI said.

A penalty of Rs 4 crore each has been imposed on Bank of Baroda, Catholic Syrian Bank, Citibank N.A., Indian Bank and Karnataka Bank. The extent of penalty on BNP Paribas, City Union Bank, Indian Overseas Bank, UCO Bank, Union Bank of India, and United Bank of India, is Rs 3 crore each.

Rs 2 crore each has been charged in case of Allahabad Bank, Bank of Maharashtra, Canara Bank, DCB Bank, Dena Bank, Jammu & Kashmir Bank, Oriental Bank of Commerce, and Syndicate Bank.

Bank of America, Barclays Bank Plc, Central Bank of India, Corporation Bank, DBS Bank, Deutsche Bank A.G., HSBC, ICICI Bank, IDBI Bank, IndusInd Bank, JP Morgan Chase Bank, Karur Vysya Bank, Punjab & Sind Bank, Standard Chartered Bank, State Bank of India, Tamilnad Mercantile Bank and YES Bank were slapped with fines of Rs 1 crore each.