IFSC codes Current Affairs - 2020
The Reserve Bank of India (RBI) has fined Punjab National Bank (PNB) Rs 2 crore for violation of compliance with regulatory directions regarding SWIFT operations.
The RBI has toughened the stance against banks on all kind of regulatory norms post PNB fraud which put it to question the ability of the central bank. Earlier in March 2019, RBI had imposed a total monetary fine of Rs 8 crore on three banks- Karnataka Bank, United Bank of India and Karur Vysya Bank for not complying with the directions on Swift messaging software.
What is SWIFT?
SWIFT which 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 for sending and receiving payments.
Suppose a customer of a Bank of America of New York Branch wants 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.
Tags: IFSC codes • Karnataka Bank • Karur Vysya Bank • PNB • Punjab National Bank