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PSBs to link SWIFT with Core Banking Solution by April 30
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SME Times News Bureau | 16 Mar, 2018
All public sector banks (PSBs) will have to link their SWIFT systems
with their respective Core Banking Solution (CBS) systems by April 30 as
a measure to prevent frauds like the recent one perpetrated on Punjab
National Bank (PNB), it was announced on Thursday.
The state-run
banks also decided to speed up the process of taking out "cyber
insurance", among other decisions that were taken here at a workshop of
senior PSB officials on risk management.
The Rs 13,540 crore
fraud on PNB by accused diamantaire Nirav Modi and his uncle Mehul
Choksi, involved using Letters of Undertaking (LoUs) issued in favour of
the accused by bank employees who misused their access to PNB's SWIFT
(Society for Worldwide Interbank Financial Telecommunications)
electronic messaging system used for overseas funds transfers.
None
of these fraudulent transactions were registered on the bank's internal
transaction messaging system, the CBS, enabling the fraud to go
undetected for long.
Briefing reporters here following a
three-day workshop, State Bank of India Deputy MD and Risk Officer M.S.
Shastri said the banks have decided to restrict SWIFT transactions to
between 9 a.m. and 8 p.m.
He also said that following an audit by
each PSB of their LoUs and Letters of Comfort (LoCs) transactions,
which systems were scrapped by the regulator Reserve Bank of India (RBI)
earlier this week, it had been reported at the workshop that there are
no more fraudulent transations on this account since the PNB fraud.
LoUs
are bank guarantees through which a bank allows customers to raise
money from another Indian bank's foreign branch as short-term credit.
"LoUs
and LoCs have been a system peculiar to India," Shastri said, adding
that traders who have been doing business through these two instruments
will now have to shift their transactions to Letters of Credit and Bank
Guarantees, which would increase the cost of credit.
The banks
are in the process of establishing their Cyber Security Operations
Centres "wherever not in place to monitor all IT assets," he said.
Improving
risk and ethical awareness among staff and strengthening Know Your
Employee (KYE) "through technological intervention" are some of the
areas identified to strengthen operational risk management, he added.
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