Banks were warned thrice against misuse of SWIFT: RBI

Editorials

ISRO Too Competent To Need Society’s Immature Reaction

Three days have passed since Lander Vikram strayed from the planned trajectory; the nation is still trying to motivate ISRO scientists as if they were in a state of despondency, notwithstanding their 95% success in meeting the Chandrayaan-2 mission objectives

Pandits’ Return Will Be Real Normalcy In Kashmir

The opposition and media would have the world believe that not persecuted Pandits getting their home and hearth back but terrorists conveniently using internet, bombs and bullets would qualify as normalcy in the Valley

Muslim Women Act Proves Modi Can If He Wants To

The passing of the Muslim Women Bill in the Rajya Sabha, which has established BJP's floor management prowess, must wake Hindus and the middle class up to pressure PM Narendra Modi to legislate what they have been demanding for ages
- Advertisement -

Mumbai: Amidst the multi-agency probe into India’s biggest banking scam, RBI said it had “confidentially” cautioned banks thrice since August 2016 on the risks arising from the malicious use of SWIFT system, and has decided to set up a panel to look into the rising incidence of frauds.

State-owned Punjab National Bank (PNB) was defrauded of Rs 11,400 crore allegedly by firms related to jewellery designer Nirav Modi and Mehul Choksi through fraudulent Letters of Undertaking (LoUs).

The fraud is being probed by several agencies including Enforcement Directorate, CBI, SFIO and Income Tax Department.

In a statement, the Reserve Bank of India said that as part of the ongoing efforts for strengthening of the supervisory framework in the country, it has been issuing necessary instructions to banks from time to time on a variety of issues of prudential supervisory concern, including the management of operational risks inherent in the functioning of banks.

The risks arising from the “potential malicious use” of the SWIFT infrastructure, created by banks for their genuine business needs, has always been a component of their operational risk profile.

RBI further said it “had, therefore, confidentially cautioned and alerted banks of such possible misuse, at least on three occasions since August 2016, advising them to implement the safeguards detailed in the RBI’s communications, for pre-empting such occurrences”.

Banks have, however, been at varying levels in the implementation of such measures, it added.

“In the wake of SWIFT-related fraud involving significant amount, reported recently by PNB, RBI has today reiterated its confidential instructions and mandated the banks to implement, within the stipulated deadlines, the prescribed measures for strengthening the SWIFT operating environment in banks,” the statement said.

The central bank said it has decided to constitute an Expert Committee under the chairmanship of YH Malegam, a former member of the Central Board of Directors of RBI.

The committee, RBI said, has been set up in view of large divergences observed in asset classification and provisioning in the credit portfolio of banks as well as the rising incidence of frauds in the banking system.

The panel will look into the reasons for high divergence observed in asset classification and provisioning by banks vis-a-vis the RBI s supervisory assessment, and the steps needed to prevent it.

It will also look into factors leading to increasing incidents of frauds at banks and the measures (including IT interventions) needed to curb and prevent them.

The Malegam committee has been also asked to look into the role and effectiveness of various types of audits conducted in banks in mitigating the incidence of such divergence and frauds.

The members of the committee are, Bharat Doshi (Member, Central Board of Directors, RBI), S Raman (former CMD, Canara Bank and former whole-time Member, SEBI); and Nandkumar Saravade, (Chief Executive Officer, Reserve Bank Information Technology).

A K Misra, Executive Director, RBI will be the Member-Secretary of the committee.

SWIFT (Society For Worldwide Interbank Financial Telecommunication) is an infrastructure to provide secure financial messaging services across the globe.

SWIFT messages and data flows are encrypted, and both logical and physical security measures are implemented and monitored for continued effectiveness.

PTI

- Advertisement -

More reports

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

- Advertisement -

Articles

BJP Could Not Have Won With This Approach To Delhi

From not paying attention to the corruption-ridden MCD to aloof leaders whose houses witnessed no activity during campaigns, BJP went all wrong in the Delhi assembly election

AAP Win In Delhi Was Foregone Conclusion: 5 Reasons

The five factors that contributed to the AAP victory have been arranged in the decreasing order of relevance; the first three will remain constant for a few more Delhi elections

Rahul Gandhi’s Intemperance Costs INC Dear Again

After forfeiting the Delhi poll with his 'danda mārenge' comment, the politician who has pledged never to grow up must put both his feet permanently in the mouth to gag himself

Bloomberg For US President? Why Not?

Mayor Michael Bloomberg can be an attractive candidate to a lot of voters – those who are concerned about the leftward, idiosyncratic, wokey, “let us butt into every other country’s internal policy initiatives” overreach of the Democrats

‘सभी संगठनों से मुक्त’ जामिया शूटर ‘बजरंग दल’ का कैसे हो गया?

जामिया क्षेत्र में गोली चलाने से पहले 'रामभक्त गोपाल' ने अपनी प्रोफ़ाइल बदली और धड़ल्ले से दक्षिणपंथी संगठनों व एक पार्टी के नाम दर्ज कर दिए

30 साल से ज़िन्दगी तलाशते कश्मीरी हिन्दू

मस्जिदों से हिन्दुओ के सफाए के पैगाम आए; एक के बाद एक दिल दहलाने वाली खबर आई; जुमे की नमाज़ के बाद सड़को पर जो भी हिन्दू दिखा, काट दिया गया

For fearless journalism

%d bloggers like this: