PNB let SWIFT run outside its core banking system — and missed $2B over six years

Between 2011 and 2017, Punjab National Bank’s Fort branch in Mumbai issued Letters of Undertaking — guarantees that let a client borrow from other banks’ overseas branches — to a diamond and jewellery group. The LoUs went out over SWIFT, the international messaging network, and were never entered into the bank’s core banking system.

The two systems were not linked. SWIFT sent the message; the ledger never learned of it. So the guarantees did not appear in PNB’s books, did not consume the client’s credit limit, and did not show up in any reconciliation. Each expiring LoU was rolled over with a new one, which is why six years passed without the balance coming due.

It ended with one person looking. In January 2018 a PNB official queried a request that had no matching record in the core system, and the chain unwound. In February 2018 the bank disclosed roughly $2 billion of exposure — the largest fraud in Indian banking. The group behind the borrowing collapsed, its stores closed, and Indian authorities seized assets and pursued extradition proceedings that were still running in 2025.

PNB’s own controls had flagged nothing. The bank later linked SWIFT to the core system, and the Reserve Bank of India ordered every Indian bank to do the same by April 2018 — a control the industry had assumed was already in place.