RBI imposes Rs 8 crore fine on 3 banks for non-compliance in Swift operations

The Reserve Bank of India (RBI) has imposed a fine of 8 crores on 3 banks viz. Karnataka Bank, United Bank of India and Karur Vysya Bank for non-compliance of directions on Swift messaging software. A fine of 4 crores was imposed on Karnataka Bank, 3 crores on United Bank of India and one crore on Karur Vysya Bank.

SWIFT

SWIFT stands for Society for Worldwide Interbank Financial Telecommunications is a messaging network that financial institutions use to securely transmit information and instructions through a standardized system of codes. Under SWIFT, each financial organization has a unique code which is used to send and receive payments.

Suppose a customer of a Bank of America of New York Branch want to send money to the ICICI bank account in Bengaluru, he can approach the Bank of America’s New York Branch with the account number of ICICI to which the money needs to be deposited and ICICI Banks Swift Code for the Bengaluru branch.

Bank of America’s New York Branch will send the payment message to the ICICI Bengaluru branch over the secure SWIFT network. Once ICICI ‘s Bengaluru branch receives the SWIFT message about the incoming payment, it will clear and credit the money to the account. SWIFT code is used when the transfer between two banks happens internationally as we use IFSC codes for the domestic transfers i.e. financial transactions within the geographical territory of India.

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