SWIFT 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
India’s largest private sector lender ICICI Bank became first Indian bank to go live on SWIFT’s (Society for World Interbank Financial Telecommunication System) Global Payment Innovation (GPI), an improved cross-border payments service.
SWFIT GPI was launched in May 2017 to help banks to track their global transactions at all times, keeping full vigil on payments activity. It covers all payment instructions sent across network, enabling GPI banks to track all their SWIFT payment instructions at all times, and giving them full visibility over all their payments activity. It accounts for 10% of cross border payment traffic on SWIFT network and has enabled more than hundred billion dollars to be transferred across world rapidly and securely every day.
It improves customer experience by increasing speed, transparency and automatically provides status updates to all GPI banks involved in any GPI payment chain. It allows banks to confirm when payment has been completed. It facilitates more accurate reconciliation of payments and invoices, optimises liquidity with improved cash forecasts and reduces exposure to Foreign exchange risk, with same-day processing of funds in beneficiaries’ time zones.
SWIFT (Society for World Interbank Financial Telecommunication System)
SWIFT is global financial messaging service that enables financial institutions worldwide to send and receive information about financial transactions in secure, standardized and reliable environment. It is used to transmit messages relating to cross border financial transactions. It was founded in 1973 and is headquartered in La Hulpe, Belgium.