"Even customers used to say if ‘Shetty sir’ is not around let’s not proceed with anything."No one would work on SWIFT in his absence," said one of the co-workers.The auditor, who asked not to be named, said his concerns were raised to the bank’s audit committee but he was told by Punjab National executives: "Let this go this time, we will note this and take steps.Reuters called the other 16 accounting firms listed in the bank’s annual report from the 2010-11 fiscal year to the most recent."Sometimes the concurrent auditor just blindly signs whatever is given to him without verifying what is going on," the official said.Most big global banks began to connect SWIFT - originally standalone terminals like the telex machines they replaced - to their central systems in the 1990s. The prime objective of RBI’s audit should be to see that systems and procedures are there and those are functioning."The details, he said, would have been available to RBI officials through his subsequent report, but as far as he was aware no action was taken. 25, 2016 letter from the RBI listed what it described as problems that banks reported after receiving the August communication - a number of which were to show up in the Punjab National case. "It was as if they were bank employees," said one banker who still works in the currency exchange office.Last month, after the fraud was discovered, the reserve bank set a April 30 deadline for integrating banks’ internal software and SWIFT."A 100 per cent audit is specified only for high-risk areas," he said.One auditor, who inspected the branch on a quarterly basis between October 2011 and September 2012, said he raised the question of why Nirav Modi was getting so much credit.Shetty, they said, declined to show others how to operate the SWIFT system.".Audit frameworkThe framework for auditing India’s banks is set up to provide three levels of scrutiny: continuous monitoring by internal auditors, quarterly inspection by statutory auditors and an annual inspection by the RBI, according to interviews with officials at the central bank. The calls were either unanswered or met with refusal to discuss particulars of the audits.Neither man has been charged with a crime."Two of the RBI-approved statutory auditors who inspected the Mumbai branch confirmed they met Shetty in the foreign exchange room.But a former senior RBI official with direct knowledge of the central bank’s oversight of foreign exchange transactions said they often do not provide much of a backstop.Three executives with experience of the cash payments industry said this means transactions are automatically recorded and reconciled within the bank and, ideally, with counterparties.Explaining the RBI’s approach overall, he added: "We are supervisors.In some cases, the RBI said, that meant more than 1,000 people being able to log on, which "exposed the bank to heightened risk of fraudulent activities".Warning signsDocuments show that the RBI knew more than a year before the current scandal that there were warning signs about how Indian banks administered the SWIFT network.Several banks, the RBI wrote, had "no/little audit oversight on the SWIFT framework despite significant financial ramifications".A Nov."Earlier, the branches of banks were at least scared that RBI might catch any malpractice," the official said.A letter on Aug.Two co-workers described Shetty as a socially taciturn man who, after starting the work day by moisturizing his face and hands with Pond’s cream, began sipping a seemingly endless series of cups of tea and dialling up customers on his iPhone.Asked about the RBI’s annual audit, a current official who previously worked in its supervision division said the central bank has moved away from doing annual branch inspections, instead relying primarily on data from the lender’s headquarters.R Gandhi, deputy governor at the RBI from 2014 to 2017, said the statutory audit process, which is carried out by private accounting firms, was not meant to be comprehensive.

Transactions such as the letters of undertaking sent by Shetty result in credit being given to a borrower in an account known as a "nostro", which is owned by the issuing bank - in this case Punjab National - but hosted by another bank overseas. 3, 2016 from the RBI to bank executives warned of "a recent incident involving attempted unauthorized transfer of funds from the nostro account factory direct sale wall art vintage brass flower relief sculpture for home decoration of a bank"."Representatives of Modi, the jeweller, would spend hours in the office, sometimes eating lunch there, two employees at the branch said.

The RBI asked the top management of Indian banks to not only ensure that appropriate controls were in place, but also to reconcile their nostro account transactions – that is, to check that they matched their banks’ internal records.The chief executive officer of SWIFT from 1992 until 2007, Leonard Schrank, said: "I can’t imagine not incorporating SWIFT payments as part of overall reconciliation.The bank’s cornerstone internal, or concurrent auditors, are expected to run daily checks on all SWIFT transactions, according to RBI officials. Both are currently outside the country and have denied the allegations.Several Indian state-run banks had followed a "decentralized set up for SWIFT", meaning that multiple branches and, as a result, "significantly higher number of users" had access to sending money across the global network.