Case Brief
What Happened
The Reserve Bank of India imposed monetary penalties on 36 banks for failing to comply with RBI directions on time-bound implementation and strengthening of SWIFT-related operational controls. The action was taken under Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949, after an assessment of 50 major banks found deficiencies in areas such as direct creation of payment messages in the SWIFT environment, STP between CBS/accounting and SWIFT, segregation of users, independent log reconciliation, additional approval for high-value payment messages, and Nostro reconciliation. After show-cause notices, replies, hearings, and further submissions, RBI levied penalties ranging from ₹10 lakh to ₹40 lakh on the affected banks.
Quick Facts
- Primary Impact
- Fine: Rs 40.0 L
- Entity Type
- Bank
- Location
- Not specified
- Order Date
- 31 Jan 2019
- Effective From
- 31 Jan 2019
- Entities Affected
Why RBI Acted
RBI imposed monetary penalties on 36 banks under Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949, after an assessment found non-compliance with one or more directions on SWIFT-related operational controls. The directions covered payment-message creation in SWIFT, straight-through processing between CBS/accounting and SWIFT, segregation of users across CBS and SWIFT, independent reconciliation of SWIFT logs with CBS entries, an additional approval layer for high-value payment messages, and Nostro reconciliation on prescribed timelines.
Severity Assessment
The action is a monetary penalty of ₹40 lakh, which falls in severity band 3, and there is no broader operational restriction.
Impact
The penalized banks must absorb the financial penalty and continue improving compliance with SWIFT-related controls. RBI also stated it will continue to closely monitor adherence to these controls on an ongoing basis; the action does not pronounce on the validity of customer transactions or agreements.
Regulatory Basis
- Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949
Restrictions & Effective Timeline
- Effective From
- 31 Jan 2019
Affected Entities
- Bank of BarodaBank · Primary
Published as Bank of Baroda
- Catholic Syrian Bank LimitedBank · Bulk Member
Published as Catholic Syrian Bank Limited
- Citibank N.ABank · Bulk Member
Published as Citibank N.A.
- Indian BankBank · Bulk Member
Published as Indian Bank
- Karnataka Bank LimitedBank · Bulk Member
Published as Karnataka Bank Limited
Official RBI Source
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