The Reserve Bank of India (RBI) has penalised 36 public, private and foreign banks for non-compliance with various directions on the time-bound implementation and strengthening of SWIFT operations.
SWIFT (Society for Worldwide Interbank Financial Telecommunications) is the messaging network used by banks to transmit instructions, or information, on financial transactions. An alleged Rs 14,000-crore fraud at Punjab National Bank, detected last year, involved the misuse of this software.
In a late evening announcement on Friday, the central bank said it had imposed monetary penalties totalling Rs 71 crore on the 36 lenders. The list includes the State Bank of India, ICICI Bank, Bank of Baroda, YES Bank and Citibank.
The penalties, which ranged from Rs 1 crore to Rs 4 crore, were imposed by orders dated January 31, 2019, and February 25, 2019.
The RBI said the penalties were on account of deficiencies in regulatory compliance and “is not intended” to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers. The banking regulator had carried out an assessment of compliance with its directions on the implementation and strengthening of the SWIFT-related operational controls of 50 major banks.
The assessment, the RBI said, revealed that banks had not complied with one or more of the major directions relating to the direct creation of payment messages in the SWIFT environment.
The banks also did not have an additional layer of approval for all payment messages exceeding a particular threshold.
Based on its findings of the assessment and extent of non-compliance, the RBI issued show cause notices to 49 banks on why penalty should not be imposed for non-compliance with directions.
“After considering the replies received from the banks, oral submissions made in the personal hearings were 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,” the central bank said.
A fine of Rs 4 crore was imposed on BoB, Citibank, Catholic Syrian Bank, Indian Bank and Karnataka Bank.
The RBI fixed a Rs 3-crore fine on BNP Paribas, City Union Bank, Indian Overseas Bank, Uco Bank, Union Bank of India and United Bank of India.
Eight banks were fined Rs 2 crore — Allahabad Bank, Bank of Maharashtra, Canara Bank, DCB Bank, Dena Bank, Jammu & Kashmir Bank, Oriental Bank of Commerce and Syndicate Bank.
A fine of Rs 1 crore was imposed on 17 lenders. The list includes Bank of America, Barclays Bank Plc, Central Bank of India, Corporation Bank, DBS Bank, Deutsche Bank, HSBC, ICICI Bank and IDBI Bank.
The other banks who were told to pay Rs 1 crore were IndusInd Bank, JP Morgan Chase Bank, Karur Vysya Bank, Punjab & Sind Bank, Standard Chartered Bank, the State Bank of India, Tamil Nadu Mercantile Bank and Yes Bank.