- In the wake of SWIFT-related fraud involving Rs 11,300 crore, reported recently by Punjab National Bank, the Reserve Bank of India on 20 February 2018, constituted a five member panel under Expert Committee under the chairmanship of Shri Y H Malegam, a former member of the Central Board of Directors of RBI, to look into the wide divergence by banks in asset classification and provisioning and reasons for frauds and measures to prevent it and also asked them to strengthen the SWIFT operating environment.
- – The members of the committee are; Shri Bharat Doshi, Member, Central Board of Directors, RBI; Shri S Raman, former Chairman and Managing Director, Canara Bank and former Whole-Time Member, SEBI; and Shri Nandkumar Saravade, Chief Executive Officer, Reserve Bank Information Technology Pvt Ltd (ReBIT). Shri A K Misra, Executive Director, RBI will be the Member-Secretary of the committee.
- According to the RBI notification, the risks arising from the potential malicious use of the SWIFT infrastructure, created by banks for their genuine business needs, has always been a component of their operational risk profile. RBI had, therefore, confidentially cautioned and alerted banks of such possible misuse, at least on three occasions since August 2016, advising them to implement the safeguards detailed in the RBI’s communications, for pre-empting such occurrences. Banks have, however, been at varying levels in implementation of such measures.
- The panel will also look into the reasons for high divergence observed in asset classification and provisioning by banks vis-à-vis the RBI’s supervisory assessment.
About the SWIFT
- SWIFT stands for the Society for Worldwide Interbank Financial Telecommunications.
- It is a messaging system used by banks to send information and instructions in an encrypted format through a secure channel.
- It is a global member-owned cooperative and the world’s leading provider of secure financial messaging services.
- Headquartered in Belgium, SWIFT’s international governance and oversight reinforces the neutral, global character of its cooperative structure. SWIFT’s global office network ensures an active presence in all the major financial centres.
- SWIFT does not hold funds or manage accounts on behalf of customers.