INDIAN BANK TIGHTENS SWIFT ACCESS
Lender restricts system access to officers, sets 3-person verification process
INDIA’S state-run Punjab National Bank (PNB) has stepped up its controls on the use of global payments network SWIFT following an alleged US$1.77 billion (RM6.94 billion) fraud, according to memos issued this month.
India’s second-biggest state lender this month revealed the country’s biggest loan fraud, which it alleges was committed by two junior officials at a Mumbai branch, who issued unauthorised “letters of undertaking” (LoUs) via SWIFT, for firms linked to billionaire jeweller Nirav Modi and his uncle Mehul Choksi.
The undertakings, which PNB said were issued between 2011 and last year with incomplete ledger entries by the two officials, were used by Modi and Choksi’s firms to obtain credit from the overseas branches of mostly Indian lenders.
The new measures mean only PNB officers will be able to initiate messages on SWIFT, taking away the authority of clerks to do so.
Several new limits have been placed on the amount that officers can generate depending on their seniority in the bank hierarchy.
The note sent by the bank’s head office in New Delhi to all regional offices on February 17 also stated any SWIFT message would have to be created, verified and authorised by three different officers, starting yesterday. Previously only two individuals were needed for the process.
PNB has created a unit called “Treasury Division Mumbai” for reauthorisation of most messages sent over SWIFT by branches. The messages include those meant for LoUs, according to a separate circular the bank sent to all its offices on February 12.
“The designated officer at SWIFT Centre, Treasury division, will cross-check the credentials of (the) message in Finacle,” said the note, referencing the lender’s core banking software that was allegedly bypassed to pull off the scam, whose scale PNB only disclosed last week.
Meanwhile, an Indian financial crime-fighting agency said it had seized a Rolls Royce Ghost, a Porsche Panamera and some half a dozen more luxury vehicles belonging to Modi and his firms.
In what has been dubbed the biggest fraud in India’s banking history, police have so far arrested a dozen people — six from the bank and six more from Modi and Choksi’s companies — as they continue the probe.