PNB's 11,400 crore scam raised the question on banks' core banking solutions and thus threatened the people's trust in banks. To deal with the situation and to tighten the internal controls in banks Reserve Bank of India has directed the banks to integrate SWIFT (Society for Worldwide Interbank Financial Telecommunication) with its core banking solutions (CBS) by April 30
PNB fraud has led many banks to review their internal processes and have started centralising and linking their processes to CBS. Each bank will have to review their control systems and technology separately, as their problems and loopholes may differ.
“There is already a mandate from RBI that you need to comply with this straight through processing and combining SWIFT to CBS, who have not done. Everybody has started (sic),”
PNB fraud has led many banks to review their internal processes and have started centralising and linking their processes to CBS. Each bank will have to review their control systems and technology separately, as their problems and loopholes may differ.
“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 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 implementation of such measures,”
What is SWIFT Code?
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) provides a network that helps financial institutions worldwide to send and receive information about financial transactions in a secure and reliable environment. The Society for Worldwide Interbank Financial
SWIFT transports financial messages in a highly secure way and does not hold accounts for its members or perform any form of clearing or settlement. SWIFT does not help in funds transfer rather it sends payment orders which must be settled by correspondent accounts that the institutions have with each other.
Expected Questions
1. What is the deadline for the banks to link their Core Banking Solutions to SWIFT Code?
a. 1st April 2018
b. 30 April 2018
c. 31 March 2018
d. 30 May 2018
What does S stand for in SWIFT Code?
a. Society
b. Security
c. Scrutiny
d. Sectional
