SWIFT IMPLEMENTATION: Karnataka Bank gets Rs 4 cr fine from RBI

A day after it imposed monetary penalty of Rs 7 crore on four PSU banks, the Reserve Bank on Monday slapped a fine of Rs 4 crore on Mangaluru-headquartered Karnataka Bank for delays in the implementation of new controls relating to the SWIFT system of international payments.

The private sector lender was one of the banks hit by the Gitanjali Gems related fraud, with an exposure of around Rs 86 crore.

The promoter of Gitanjali Gems, Mehul Choksi and his nephew Nirav Modi came under the scanner the Rs 13,600 crore Punjab National Bank (PNB) scam. PNB’s exposure to the scam stemmed from the misuse of its SWIFT system by two of its Mumbai-based employees.

The SWIFT (Society for Worldwide Interbank Financial Telecommunications System) is messaging service used by financial institutions to securely transmit information related to payment approval.

However, the Karnataka Bank has already clarified that it did not have any Letter of Understanding (LoU) Exposure in Choksi’s company. Both Choksi and Modi had left the country in January last year.

First incorporated in 1924, Karnataka Bank Limited today has a network of 838 branches, 1374 ATMs and 300 e-lobbies/mini e-lobbies across 22 states and 2 union territories.