PNB accusation from SWIFT, know how these transactions are done

The layers of Punjab National Bank Mahoghala are being opened minute-by-minute. In the scandal of about 11 thousand crore rupees, there is a possibility of misusing some of the rules of the bank. Ignoring arrangements like Letter of Undertaking and Swift Transfer are responsible for this scandal. We are telling you what the Letter of Undertaking (LoU) and Swift are and how these transactions happen.

What is LoU?

Letter of undertaking (LoU) is a bank guarantee in a way. It is issued to make overseas payments for imports. The issuing bank becomes the guarantor and he accepts the payment of the principal amount and interest on his client's loan unconditionally.

When Lou is issued, it includes the issuing bank, the accepting bank, the importer and the company benefiting from it. In the case of PNB fake LoU was acquired and on the basis of these loans were taken from foreign branches of banks like Axis and Allahabad.

SWIFT also abused

It is being told that PNB employees also abused SWIFT for the transaction of money. Through this, they were dodged by Core Banking System (CBS), which used to process daily banking transactions. Through this, they passed the guarantee given on LoUs without requisite approval. Based on this, Branches of Indian banks abroad have given loans.

What is SWIFT?

Whenever a LoU is issued on behalf of a bank. After this, the information about credit transfer is given to the bank located abroad. This information is given through SWIFT (Society for Worldwide Interbank Financial Telecommunication) system. This is an important information through which the bank gives its consent and guarantee.

To give information of Swift, the bank official has to log in and confidential information has to be entered in it. It includes the account number and SWIFT code. Generally there are three layers in it. The core banking system (CBS) consists of a 'maker', a checker, and a verifier, which continues only after passing through it.

Actually, messages related to 'swift' are not immediately tracked in PNB's Pinnacle software system because they are issued without entering the bank's CBS. The advantage of this is that two PNB employees took up and transacted crores of rupees.

What is CBS?

Core Banking System or CBS is the system, so that all branches of the bank are connected. CBS is the reason that you can operate your account with any branch of the bank and send money. After this arrangement comes, you become a customer of the bank rather than a branch. Here, every transaction in the banking system is updated on real time.

In the case of PNB Mahagopalite, the employees have not sent the details of the transaction to CBS. This is the reason why the bank could not find the scandal at that time.