RBI fines banks for violations
The Reserve Bank of India (RBI) has imposed stiff financial penalties on the State Bank of India(SBI) and the Union Bank of India (UBI) for the violation of specific RBI Regulatory violations.
While SBI was fined a significant sum of Rs 7 crores, UBI got away with a smaller fine of Rs 10 lakh.
Why were the banks fined?
SBI was fined for the non-compliance with the directions issued by the RBI for the Income Recognition and Asset Classification (IRAC) norms, code of conduct for opening and operating current accounts and reporting of data on Central Repository of Information on Large Credits (CRILC), and fraud risk management and classification and reporting of frauds. After a statuary inspection, RBI found that SBI had violated these norms.
The Union Bank was fined for the non-compliance with the directions on the cybersecurity framework in banks issued by the RBI. This was determined after the RBI carried out an examination of the cybersecurity framework of the bank after fraudulent messages were generated through the Bank’s SWIFT system.
What is the SWIFT system?
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is the provider of a network which enables major financial institutions globally to send and receive information about financial transactions on a secure, standardized and reliable line. It sells software and services to financial institutions.
It is a messaging system and does not hold any money or financial accounts. The SWIFT system was earlier in news in the PNB scam.