- Implication on Buyers Credit because of PNB Fraud
- RBI 2016 Circular: Fraud Related to Trade Finance Transactions – Misuse of Swift
What is SWIFT Code ?
SWIFT code (also known as ISO 9362, SWIFT-BIC, BIC code, SWIFT ID or SWIFT code) is a standard format of Business Identifier Codes approved by the International Organization for Standardization (ISO). It is a unique identification code for both financial and non-financial institutions. These codes are used when transferring money between banks, particularly for international wire transfers, and also for the exchange of other messages between banks.
SWIFT (Society for Worldwide Interbank Financial Telecommunication) does not facilitate funds transfer; rather, it sends payment orders, which must be settled by correspondent accounts that the institutions have with each other. Each financial institution, to exchange banking transactions, must have a banking relationship by either being a bank or affiliating itself with one (or more) so as to enjoy those particular business features.
The SWIFT code is of 8 or 11 characters, made up of:
For Example: HDFC IN BB AHM
- The first four characters represent the Bank code, for example HDFC (HDFC Bank)
- The next two characters represent the ISO Country code, for example IN (India)
- The next two characters are the Location code, for example BB (Mumbai)
- Optionally a three character branch code can be added at the end of the address. For example HDFCINBBCCAHM might be the Ahmedabad branch. These codes are primarily used for internal routing purposes within the bank, as the branches themselves do not have direct connection. Usage is often more common in some countries.
Where an 8-digit code is given, it may be assumed that it refers to the primary office.
Type of Swift Message
SWIFT messages are identified in a consistent manner. They all start with the literal “MT” which denotes Message Type. A 3-digit number then follows this. The first digit represents the Category. A category denotes messages grouped together because they all relate to particular financial instruments or services. The full list is as follows:
|MT2nn||Financial Institution Transfers|
|MT3nn||FX, Money Market & Derivatives|
|MT4nn||Collections and cash letters|
|MT6nn||Precious Metals & Syndications|
|MT7nn||Documentary Credits & Guarantees|
|MT9nn||Cash Management & Customer Status|
The last digit is the Type and denotes the individual message. There are several hundred message types across the categories in total.
A special subset of Messages is known as the Common Group because the last two digits represent the same message in each category. For example:
|MT299||Free format relating to transfers|
|MT599||Free format relating to securities|
|MT999||General free format|
Types of Swift Message used in Buyers Credit.
- MT799 : Authenticated Free Format Message type.
- LOU Issuing Bank: For sending letter of undertaking / letter for comfort for availing buyers credit
- Buyers Credit Bank: For confirmation of funding along with repayment details
- MT202: Requests the movement of funds between financial institutions
- Buyers Credit Bank: At the time of payment of buyers credit to LOU issuing Bank
- LOU Bank: At the time of repayment of buyers credit of principal and interest
- MT999 : Unauthenticated Free Format Message. Cases where there is no direct swift key arrangement, banks use this free format for basic communication.
How to Search a Swift Code of a Bank
Using the below link, one can find swift code for a particular financial institution. Filling up details of two fields i.e. Institution Name and Country, will provide the desired Swift Code.