Public sector banks have confirmed that Nirav Modi scam is the only case of Letters of Undertaking (LoU) fraud within the banking system and no other bank is affected with an LoU related fraud. They have said that it is one of its kind in about 5000 branches dealing in foreign exchange in the entire banking system in India.
"Each bank has already scanned their LoU/LoC related transactions and have confirmed during the workshop that all of them are properly assessed, genuine and accounted for except those already reported,” said M.S. Sastry, Deputy managing director and chief risk officer of State Bank of India.
The public sector bankers are attending a three day workshop of executive directors, chief risk officers and chief technical officers of public sector banks at State Bank Academy, Gurgaon. The workshop was organised to ascertain prevailing risk management practices and arrive at a common understanding with regards to best practices.
Action plans have been drawn to further strengthen controls in areas of trade finance, SWIFT, credit risk, operational risk besides cyber and IT risk. Banks will now place these action plans with timelines for implementation/improvement before the respective boards.
Further controls have also now been put in place that includes additional layer of approval for all outward SWIFT messages, integration of SWIFT with CBS latest by 30th April 2018, besides time restrictions for such transactions, that is, between 9am to 8pm only.
Banks will also work towards improving risk awareness and ethical awareness among staff and preventive monitoring and surveillance of transactions. Banks will further strengthen KYE (Know your Employee) through technological intervention and employees at critical positions will be under stringent watch.
An onsite cyber security operation centre (C-SOC) that will monitor all IT assets of banks is also in the process of being established.