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RBI fines 19 lenders for non-compliance on SWIFT use

Wednesday 6 March 2019 13:40 CET | News

India’s central bank has fined at least 19 lenders for failing to comply with its guidelines on the use of global payments network SWIFT.

Among the lenders, banks such as ICICI Bank and State Bank of India are included. However, the Reserve Bank of India did not disclose specifics of the non-compliance aspect. Four bankers whose institutions were fined said that most of the issues were related either to interpretation of the RBI’s guidelines or minor technical matters. The penalties summed over INR 400 million, which represent USD 5.67 million, and ranged from INR 10 million to INR 40 million for each bank.

This decision follows the 2018 USD 2 billion fraud at state lender Punjab National Bank (PNB), resulting from unauthorised credit guarantees to businesses. After the PNB loan fraud, the government criticised the RBI for its lack of regulatory oversight, which led to the central bank’s decision to send a confidential directive to banks about how they must use the SWIFT payment system, requiring most banks to overhaul their financial systems. One of the requirements suggested that banks should connect the SWIFT interbank messaging system with their core banking software by 30 April 2018. However, gaps in compliance were found in more than two dozen places, prompting the RBI to impose the fines.


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Keywords: RBI, India, lenders, compliance, SWIFT, ICICI Bank, State Bank, banks, penalties, loan fraud, credit guarantees, regulations, payments, interbank, banking, fines, financial system
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Countries: World