The RBI had issued two circulars in 2016 to banks on strengthening the Society for Worldwide Interbank Financial Telecommunication (SWIFT) system, the misuse of which was unveiled last month in the Rs 12,600 crore fraud on state-run Punjab National Bank (PNB), Parliament was informed on Tuesday.
The bank has also filed criminal complaints with CBI and the ED, both of which launched nationwide searches on dozens of offices and residences of the alleged fraudsters.The bank has named Modi's brother, his American wife Ami, and uncle Choksi besides some others in the FIR. An LoU is a type of guarantee between two banks that allows the issuer bank's customer to get foreign exchange from another Indian bank's foreign branch in the form of short-term credit.
The issue of LoU for import of pearls in large quantity in the PNB case was rather unusual.
An unidentified lawyer for Choksi told Reuters that he was unaware of the new allegations, and refused to comment. By giving LoU, PNB agrees to repay the principal amount and interest on the clients (Nirav Modi) loan unconditionally.
The PNB scam by diamantaire Nirav Modi and his uncle Mehul Choksi involved using LoUs issued in favour of the accused by bank employees who misused their access to PNB's SWIFT - the electronic messaging system used for overseas funds transfers.
The RBI has already started a special audit of public sector banks wherein it will closely scrutinise their trade financing activities especially with regards to the issuances of LoUs.
He said as per inputs from PNB, messages were sent via SWIFT to overseas branches of Indian banks, regarding fraudulently issued LoUs/FLCs without entering the transactions in the bank's Core Banking System (CBS).
Listing out the steps taken by PNB, Shukla said the bank has established an additional tier (off-site) as a third level of re-authorisation of Swift messages, wherein payment messages are re-authorised by a separate team of Swift centre, Mumbai only.