RBI imposes monetary penalty on 36 banks for SWIFT non-compliance

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RBI Monetary penalty

The Reserve Bank of India (RBI) has imposed, by orders dated January 31, 2019, and February 25, 2019, monetary penalty for non-compliance with various directions issued by RBI on time-bound implementation and strengthening of SWIFT-related operational controls on 36 banks, the RBI said in a statement.

Banks List based on the penalty amount

S.no1 Crore2 Crore3 Crore4 Crore
Bank of America N.A.Allahabad BankBNP ParibasBank of Baroda
2Barclays Bank PlcBank of MaharashtraCity Union Bank LimitedCatholic Syrian Bank Limited
3Central Bank of IndiaCanara BankIndian Overseas BankCitibank N.A.
4Corporation BankDCB Bank LimitedUCO BankIndian Bank
5DBS Bank LimitedDena BankUnion Bank of IndiaKarnataka Bank Limited
6Deutsche Bank A.G.Jammu & Kashmir Bank LimitedUnited Bank of India
7Hongkong and Shanghai Banking Corporation LimitedOriental Bank of Commerce
8ICICI Bank LimitedSyndicate Bank
9IDBI Bank Limited
10IndusInd Bank Limited
11JP Morgan Chase Bank N.A.
12Karur Vysya Bank Limited
13Punjab & Sind Bank
14Standard Chartered Bank
15State Bank of India
16Tamilnad Mercantile Bank Limited
17YES Bank Limited

An assessment of compliance with RBI directions on implementation and strengthening of SWIFT-related operational controls of 50 major banks was carried out which revealed that banks had not complied with one or more of the major directions pertaining to

  1. Direct creation of payment messages in the SWIFT environment,
  2. Implementation of Straight Through Processing (STP) between CBS/Accounting System and SWIFT system,
  3. Ensuring that users entering/ passing/authorizing the transactions in CBS were different from those operating in SWIFT environment,
  4. Independent reconciliation of logs generated from SWIFT with corresponding entry passed in the CBS/accounting system,
  5. Introduction of an additional layer of approval for all payment messages exceeding a particular threshold, and (vi) Nostro reconciliation on T+1/T+5 basis.

Based on the findings of the assessment and extent of non-compliance, Notices (SCNs) were issued to 49 banks advising them to show cause as to why penalty should not be imposed for non-compliance with directions issued by RBI as indicated therein.

After considering the replies received from the banks, oral submissions made in the personal hearings, where sought by the banks, and examination of additional submissions, if any, RBI decided to impose monetary penalty on aforementioned 36 banks, based on the extent of non-compliance in each bank.

RBI will continue to closely monitor compliance with these controls on an ongoing basis.

Source : From RBI website

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