SWIFT SOCIETY FOR WORLD INTERBANK FINANCIAL TELECOMMUNICATION SYSTEM LOU(LETTER OF UNDERTAKING)
SWIFT is global financial messaging service that enables financial institutions worldwide to send and receive information about financial transactions in secure, standardized and reliable environment It is used totransmit messages relating to cross border financial transactions.
It was founded in 1973 and is headquartered in La Hulpe, Belgium. It is a cooperative society under Belgian law owned by its member financial institutions with offices around the world. Globally over 11,000 financial institutions in more than 200 countries use services of SWIFT
LOU (Letter of Undertaking) SWIFT (Society of Worldwide nterbank Financial Telecommunication) and Core Banking System (CBS) were recently in news for their involvement in the Punjab National Bank fraud case. Letter of Undertaking (LoU) is a guarantee that a bank is obliged to repay the loan if the actual borrower. Officials of Punjab National Bank issued LoU to foreign banks on behalf of the PNB to sanction loan to Nirav Modi. Society of Worldwide Interbank Financial Telecommunication (SWIFT) is a system to send instant messages. Once the foreign bank receives SWIFT message, it disburses the loan to the borrower. SWIFT transactions are supposed to be regularly reviewed but PNB didn't follow the same. Core Banking System (CBS) is centralised software that keeps all records across branches and is capable of generating alerts over any undue activity.
SWIFT must be settled by correspondent accounts that institutions have with each other. On receiving this message through SWIFT, banks abroad, mostly branches of domestic banks abroad provide funds to the company. does not facilitate funds transfer, rather, it sends payment orders, that
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The Reserve Bank of India (RBI) has directed banks to link SWIFT (Society for World Interbank Financial lmunication System platform) with their core banking solutions (CBS) by April 30, 2018. This decision is part of RBI's efforts to tighten internal controls in banks following Rs 11,400 crore fraud that was unearthed at Punjab National Bank (PNB). CBS is centralised software used to support bank's most common BANK transactions.
India's largest private sector lender ICICI Bank became first Indian bank to go live on SWIFT's (Society for World ICICIBank Interbank Financial Telecommunication System) Global Payment Innovation (GPI), an improved cross-border payments service.
SWFIT GP SWFIT GPI was launched in May 2017 to help banks to track their global transactions at all times, keeping full vigil on payments activity. It covers all payment instructions sent across network, enabling GPI banks to track all their SWIFT payment instructions at all times, and giving them full visibility over all their payments activity. It accounts for 10% of cross border payment traffic on SWIFT network and has enabled more than hundred billion dollars to be transferred across world rapidly and securely every day.
Consider the following statement about SWIFT 1.Letter of Undertaking is a gurantee that is given by bank for the actual borrower 2. SWIFT is a system giving instant message and it transfer funds to the foreign. a.Only 1b.only 2 c.1and 2 d.neither1 nor 2
MBA,PGDFM Author of Bhavishya Arthik Patrika(for Civil Services), worked in SBI group for 7 years, teaching indian economy to UPSC student