PNB Current Affairs - 2019
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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 • RBI • Reserve Bank of India • SWIFT • SWIFT operations • United Bank of India • Worldwide Interbank Financial Telecommunications
The state-owned banks have started rationalising overseas operations by consolidating 35 operations and closing down non-viable branches as part of the clean and responsible banking initiative. The consolidation oncludes bank branches, remittance centres and representative offices.
It will be without affecting international presence of PSBs in these countries. Moreover, 69 operations also have been identified for further examination. It is part of government’s commitment to ‘clean and responsible banking and move towards cost efficiencies and synergies in overseas market.
The rationalisation of overseas operations of banks comes at the time when jewellery designer Nirav Modi had allegedly cheated Punjab National Bank (PNB) of Rs.12,700 crore in connivance with PNB staff and officials of overseas branches of other state-owned banks.
Presently, public sector banks have about 165 overseas branches, besides subsidiaries, joint ventures and representative offices. State Bank of India (SBI) has largest number of overseas branches (52) followed by Bank of Baroda (50) and Bank of India (29). The state-owned banks have largest number of branches in United Kingdom (32) followed by Hong Kong and UAE (13 each) and Singapore (12). As per the banking sector agenda approved at PSB Manthan in November 2017 public sector banks (PSBs) have to examine all 216 overseas operations.