MUMBAI: State Bank of India will soon sign up with the Society for Worldwide Interbank Financial Transactions’ (SWIFT) Global Payment Interface (gpi), adding to the list of Indian banks that have subscribed to the interbank communication channel’s new payment interface which is set to make cross-border transactions much more secure and transparent, a top official said.
“We are in the final stages of approval with SBI and we hope to announce the partnership soon,” said Kiran Shetty, CEO Swift India.
India’s largest lender will join 11 of its counterpart banks that will have subscribed to this payments platform which comes with features such as such as end-to-end payment tracking, access to unaltered remittance information, faster and more transparent transactions. These banks are ICICI Bank, Axis Bank, Punjab National Bank, Yes Bank, City Union Bank, HDFC Bank, Bank of India, Federal Bank Limited, Union Bank of India, Indian Bank and IndusInd Bank.
SWIFT said that they want to make gpi a universal payments interface by partnering with all major global banks by 2020. “We want to make each bank gpi-compatible. We are also looking to integrate with different domestic real-time payment platforms across the globe such as FAST in Singapore, NPP in Australia, TIPS in Europe and UPI in India such that gpi becomes the lowest common denominator in all global transactions,” said Alain Raes, Chief Executive, EMEA and Asia Pacific SWIFT.
The gpi-enabled banks can also opt for an additional feature called Payment Control Service (PCS) where in case of any irregularities during the payments’ transaction such as higher-than-usual fund size or uncommon transaction timeframe, the channel can block the transaction and notify the bank. Currently, SWIFT gpi is being used by 3500 banks across the globe carrying transactions worth over $ 300 billion daily.
The interbank messaging channel which is owned by all major international banks said that banks across the globe, including Indian banks have increased their impetus on protecting themselves against cybercrimes. “One doesn’t need guns or tanks to rob a bank anymore…top management of Indian banks have realised this and they are adopting steps to protect themselves,” Raes said.
A total of 44 Indian banks are subscribers of SWIFT’s messaging services which is a secure line to send information domestically and internationally between banks. However, over the last week, 19 of these banks have been fined a combined Rs.40 crore by the RBI for non-compliance of SWIFT norms. Raes said that the non-compliance might be due to banks not automating their protection chain and other internal reconciliations.
“This is between banks and the regulators. SWIFT cannot act as police for all our clients. We have 16 mandatory and 11 advisory principles that we recommend banks to follow,” Raes said.
In February 2018, Punjab National Bank suffered what is now popularly known to be the worst banking fraud in Indian history when the now-absconding jeweller duo of Nirav Modi and Mehul Choksi used SWIFT’s secure messaging lines to issue Letters of Understandings (LOUs) which helped them walk away with $ 2 billion after funds were transferred from the bank to overseas accounts.
PNB’s SWIFT network was not connected with its Core Banking System (CBS) and hence the fraudulent payment wasn’t detected both by the bank and SWIFT in its immediate aftermath.
Post the PNB fraud, RBI had mandated all banks using SWIFT channel to connect their core banking system with the channel. The regulator later conducted audits on these financial institutions and had issued them show-cause notices after they found varying degrees of non-compliance. This led ultimately to the central bank fining 19 banks as a rap on their knuckles to up their game and become SWIFT compliant to avoid a PNB-style dupe.
It remains unclear, however, if all the reprimanded banks have since finished the required upgrades or adjustments.