MUMBAI: The Reserve Bank of India (RBI) has once again turned the blowtorch on, mandating banks to integrate Society for Worldwide Interbank Financial Telecommunication (SWIFT) with Core Banking Solution (CBS) by April 30.
Done earlier, it could have detected the Rs 11,400-crore Punjab National Bank (PNB) fraud sooner than the seven years it took to surface, if not preventing the fraud from happening altogether.“That could be a deadline, but it’s an outer limit. Today, the urgency is such that everyone wants this project to be on fast track,” said Usha Ananthasubramanian, managing director and CEO, Allahabad Bank, which doesn’t have an integrated SWIFT and CBS interface. Sources said integration isn’t a costly affair, neither does it involve additional infrastructure and can be done with banks in-house teams.
Speaking to media on the sidelines of an event here on Friday, she said, “There’s already a mandate from RBI that you need to comply with this straight through processing and combining SWIFT to CBS.”
Typically, LoUs have to be entered into CBS as credit every month and not when the foreign branch claims money. Integration of SWIFT and CBS makes this process automatic. Else, individuals can bypass the system making or avoiding manual entries, which is exactly what happened at PNB.
SWIFT allows foreign currency transfers among lenders, via an encrypted 8 and 11 character code. It is a secure medium and hence used widely by 11,000 institutions across 200 countries. But, the absence of an integrated interface with CBS, a centralised database of financial transactions, leaves room for fraudulent activities.
Some recent examples include Union Bank of India, where hackers tried to move $171 million in July 2016, and in February 2017, when $81 million was stolen from the Central Bank of Bangladesh.
Precisely to avoid such activities, RBI said early this week that it had warned banks on at least three occasions since August 2016 to beef up the SWIFT network. It has also set up a panel under the chairmanship of Y H Malegam, to study the rising cases of bank frauds and set out a blueprint to curb them.