RBI Fines 19 Lenders For SWIFT Non-Compliance

Reserve Bank of India

The Reserve Bank of India (RBI), the country’s central banking institution, has fined almost 20 lenders, including the State Bank of India and ICICI Bank, for not complying with rules on the use of worldwide payments network SWIFT, according to reports.

The news came to light on Tuesday (March 5), and the fines were issued over the previous four days. The specific reasons for the non-compliance was not released.

Some of the fined banks said the fines generated from a misinterpretation of guidelines on unimportant technical issues.

“These are petty, procedural issues like counterparty confirmation and nothing major or structural,” one unnamed banker told Reuters.

The fines, ranging from 10 million to 40 million rupees per bank, total about $5.67 million. Last year, the Indian financial system was affected by a $2 billion fraud at Punjab National Bank (PNB), where business related to a billionaire jeweler and his uncle received unauthorized credit guarantees through SWIFT.

Mitul Budhbhatti, the associate director and head of banking, financial services and insurance at CARE Ratings, said the fines are a response to that scandal.

“The series of fines imposed is a stern signal from RBI to banks to strengthen their internal systems and minimise fraud after the PNB fraud last year, which tarnished the image of India’s banking system,” Budhbhatti said. “I expect RBI to continue to be more and more vigilant and continue with such monitoring.”

Following that scandal, RBI sent out a new and confidential directive on how to use SWIFT, which meant that most banks had to completely redo how they handled the payments system. One of the rules required banks to connect with the SWIFT messaging system for banks by April 30 of 2018.

When RBI checked for compliance, it found gaps in more than 20 places. The audit was done about 10 months ago, and the notices were sent to banks about four months ago. Some bankers said they’ve since corrected the issues.

“After the show-cause notices were issued to us, we have addressed those minor points,” said one unnamed banker.



The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.