NEW DELHI: While there are multiple versions about who is responsible for Rs 11,400 crore Punjab National Bank scam, there seems to be consensus that the fraud could have been detected in real time if PNB had linked SWIFT payment system with its core banking solution (CBS).
What, then, stopped the bank from linking SWIFT with CBS? Outdated computer systems! “When we have installed the SWIFT system, we have suggested linking it with the CBS. However, as the systems were outdated it was not possible to link it. We had suggested upgrading the system. However, for strange reasons, that was not done,” said one of the officials from the technology team of the bank.
What is even stranger is that there was no fund for upgrading computer systems, which is a basic requirement for ensuring that banking transactions are safe and secure.
PNB uses the IT payment platform designed by Infosys, which requires computers to be of certain standards. However, sources say the computer systems at PNB don’t meet these minimum capacity requirements.
“Even they (Infosys) had suggested to first upgrade the system. But, the bank did not do that due to which the linking was postponed. The offenders who were aware of the loophole exploited it,” said an official.
On Tuesday night, RBI posted a statement on its website saying it had cautioned banks about misuse of SWIFT on at least three occasions since August 2016.
“Some banks have poor mechanism for monitoring third-party processes such as SWIFT. Many third-party processes are not linked with the CBS, thus increasing chances for possible misuse. Unfortunately, banks pay heed only when some scam comes to light,” a senior executive from Infosys.
According to the official, it exposes banks not only to internal frauds but also to cyber hacks. Such a case was reported on Sunday by City Union Bank claiming “cyber criminals” had hacked its systems and transferred nearly $2 million through three unauthorised remittances to lenders overseas via SWIFT.
“There is only one provider of vigilance and monitoring software for banks and price discovery is poor. Even the biggest of public-sector banks cannot afford to buy that software,” said an official from another PSU bank. Indian banks lost Rs 16,789 crore in 2016-17 due to frauds, according to a statement by MoS for finance Shiv Pratap Shukla.
It’s business as usual, says PNB
Rejecting reports in a section of media that it has imposed restrictions on withdrawals, scam-hit Punjab National Bank on Wednesday assured investors and customers that all is well at India’s second-largest public-sector bank. “We assure you that in your bank, it is business as usual,” PNB said in a tweet. In a bid to assuage customers’ concerns, the bank said, “Be rest assured we have a strong sovereign backing. The core strengths of the bank is the brand image with rich 123 years of existence, strong CASA base, stable asset quality and increased pace of digitisation.” It averred it has the capacity and capability to “handle the situation” and protect the interest of the institution. “We have adequate capital coupled with strong non core asset base,” said the PNB tweet.