What is S.W.I.F.T. ?

S for Society
W for Worldwide
I for Inter-bank
F for Financial
T for Telecommunications.

1
 S.W.I.F.T. constituents
 It is a co-operative society of International
Banks founded in 1973 with headquarters at
Brussels , Belgium.
 Besides Banks ,it has certain approved
categories of non-Bank Institutions like
security brokers / dealers, clearing/deposit
institutions, exchange / Travellers Cheque
issuers etc. as it’s members.
 It’s website is www.swift.com
2
 What does it provide ?

• It provides a network
enabling financial institutions
to send and receive information about
financial as well as non-financial transactions
in a secure, standardized fast and reliable environment
on Global basis.

* S.W.I.F.T. also markets it’s software and services to

financial institutions.

3
 Background (earlier prevailing system)
 Total Manual Period
In olden times all documents were sent through air-mail and
bore signatures of Authorised Bank officials .
Banks were hence required to maintain such signature books
These were up-dated from time to time and were needed for verification of signatures.
Naturally this cumbersome procedure delayed conveying of message.

 Partial Manual Period

This was also called the era of Test key and Telex
Test keys were maintained at select offices for decoding .
Telex facilitated faster communication .
Though advantageous, it had certain drawbacks:
- receipt of garbled message i.e. superimposition of print of one line over another
line in older Telex Machines. ( Non PC Based Telex Machines)
- no surety whether message relayed has been conveyed at right
place or not.( as may be the machine at other end is not operative)
- geographical delay as test key say at Delhi but message meant for say
Mumbai.
4

NEED WAS FELT FOR DEVISING SOME BETTER SYSTEM.

•Necessity is the mother of invention
In May 1973,representatives of about 239 major
Banks covering 15 Countries met at
Brussels ( Belgium)
to work out a system
for
fast and accurate transfer of messages relating to
financial transactions between various Banks.
These deliberations led to the coming of
S.W.I.F.T.
which became operational on
9th May 1977 by sending first message.
message
5
 S.W.I.F.T. in INDIA
 In the Year 1988-89
a working group was formed in India under the leadership of
R.B.I. called
“SWIFT user group”.
As a result of deliberations of this group SWIFT became live
in India w .e . f. from 02.12.1991
 SWIFT set up at P.N.B.
PNB having SWIFT connectivity is one of the leading banks in
this field.
Besides above our overseas centres / tie up arrangements/
entities such as Hongkong ,Bhutan ,Dubai , London and
Kazakstan are also linked up to CBT at Treasury Mumbai.

7
 Message format - fields
 Each message text is divided into different parts called ‘ fields’
for :
-easy identification.
-indicating specific action associated with that part.
 Some fields are mandatory - MF
 Other fields are optional - OF

 Each message comprises of:

header,
message text ,
trailer
authenticator.

This will become clear if we take an example of say MT-103.

7
 Swift format MT-103
HEADER
 FIN/SESSION/OSN : F01 8167 181259
PUNBINBBAXXX
PUNJAB NATIONAL BANK ,MUMBAI

OUTPUT MESSAGE TYPE 103 SINGLE CUSTOMERTRANSFER

INPUT TIME 1140
MIR (MSG INPUT REF) 021018AIBKIE2DAXXX3822309408
SENT BY AIBKIE2DAXXX AIB BANK
DUBLIN
OUTPUT DATE/TIME 150818/1610
PRIORITY NORMAL
MUR (MSG USER REF.) 15081810571OC100
contd.

9
 MT-103 Continued
 Message text
20/ Sender’s references
SP02101810571000
23B /BANK OPERATION CODE
CRED
32A /VAL DTE/CURR/INTERBNK SETTLD AMT
150818USD1875, 2015-08-18
US DOLLAR 1875,
33B/CURRENCY/INSTRUCTED AMOUNT
USD1875, US DOLLAR
50K /ORDERING CUSTOMER
P AND H LTD
20 DOUGHCLOYNE
COURT IND EST
WILTON CORK
52D /ORDERING INSTITUTION- ADDRESS
HNB,WILTON CORK
message text continued on next slide

9
10
 Message text contd.
53A /SENDER’S CORRESPONDENT-BIC
CHASUS33XXX JP MORGAN CHASE BANK
NEW YORK,NY
57A /ACCOUNT WITH INSTITUTION
PUNBINBBDCG PUNJAB NATIONAL BANK
NEW DELHI ( E.C.E.HOUSE)
59 /BENEFICIARY CUSTOMER
/1120-87-771
SURYA ROSHNI LTD.
70 /REMITTANCE INFORMATION
/RFB/2199FT/OBI/PRO INV NO. 02-03-CC
71A/ DETAILS OF CHARGES
BEN
71F/SENDER’S CHARGES
USD25, USD25,
72/SENDER TO RECEIVER INFORMATION
PAY IN EQUIVALENT INR

10
11
 MT-103 Continued
 TRAILOR
NAC: AUTHENTICATION CODE
8173A928
CHK: CHECKSUM
DE3EFDDE44OF
 AUTHENTICATOR
SAC: SWIFT AUTHENTICATION
CORRECT
COPY:P: CBT PRIMARY COPY
11
12
 BANK IDENTIFIER CODE
 All member Banks/Branches connected to SWIFT are
automatically assigned specific Bank Identifier Code, for
easy identification and Routing of message.

 BIC Code is drawn as per norms of ISO and ICC.

 Each code is finalised by SWIFT in Brussels.
 BIC used to be published as a quarterly publication but
not now.
 The SWIFT is having website www.swift.com for online
SWIFT directory enquiry. This online enquiry is better
than the earlier paper BIC directory or PCC built in
directory as it gives latest status.

12
 BANK IDENTIFIER CODE
(contd..)
 It is a 12 Alphabet / digit code.
A few examples are:
Punjab National Bank PUNBINBBXXXX
CITI Bank CITIXXXXXXXX
Deutsche Bank DEUTXXXXXXXX

The last three digits are branch specific codes .

A few examples in PNB are:

PUNBINBBX D I B for Treasury Mumbai
PUNBINBBX DCG for B/O E.C.E. HOUSE, New Delhi
PUNBINBBX ISB for B/O I.S.B. New delhi

13
BANK IDENTIFIER CODE(contd.)
BIC -11 digit or 12 digit ????

 While giving SWIFT code to a customer we

generally give 11 digit code but actually in
preparation of message we have 12 digit code.
This leads to confusion at times.
 While preparing message we leave 9th place
untouched as it is meant for “Continent code”
which is captured by the system automatically.

14
BANK IDENTIFIER CODE (contd.)
Taking the example of Punjab National Bank
(PUNBINBBXXXX) the detailed code can be
explained as under :
 1st four alphabets/digits are for Bank.
(PUNB for Punjab National Bank)
 Next 2 are for country. ( IN for India )
 Next 2 are for location of CBT. ( BB for Mumbai)
 9th place is left blank (X).
 Last 3 (XXX) places are for Branch.
(They are “alpha” in PNB ,
but could be either “alpha” OR “Numeric”)
15
 Message Security
 SWIFT ensures a high level of safety ,
privacy, accuracy, reliability & delivery of
message within specified time schedule.

 SWIFT assumes full financial liability for

delivery of accurate, complete and
validated message from point of entry
at RP to point of delivery at CBT.
16
 SWIFT maintenance procedure
 Access to SWIFT network is through elaborate
authorization process using secret passwords
 Each message is assigned an input sequence number
ISN ,on entry of message and an output sequence
number OSN ,on exit
 If ISN is disturbed , SWIFT system rejects the message
 After assigning ISN all messages are ENCRYPTED and
transmitted through the system in coded form
 Coded words are converted into original words at
destination computer.
 Each message is assigned an authenticator on being given ISN to
guarantee identity of sender and receiver

17
 SWIFT Maintenance procedure

 Authentication codes of different Banks are automatically

provided by branch Local Authentication Keys ( LAU Keys)

 During Phase I of the protocol, the authentication keys were

called SAK –Swift authentication keys / BKE –Bilateral key
exchange were to be exchanged between Banks.

 During current Phase II it requires the Banks to connect to

Relationship Management (RMA) instead of the former
Bilateral Key Exchange (BKE) system . RMA software is
more secure and easier to keep up-to-date.

RMA completely replaced BKE since 1.1.2009.

18
 MESSAGE FLOW IN SWIFT SYSTEM
SYSTEM CONTROL PROCESSOR( Data Centers)
( LOCATED IN Netherland , USA and Switzerland )

SLICE PROCESSOR

REGIONAL PROCESSOR (SINGAPORE/LONDON )

SWIFT SERVICE PROVIDER FOR THE COUNTRY

( For PNB the same is “ORANGE” )

COMPUTER BASED TERMINAL ( CBT)

ALL PNB BRANCHES WORK THROUGH SAM (CBS)

19
 Message Types ( M T-)
SWIFT network is designed to handle all
types of financial messages.
In order to systematise / categorise
various functions / messages , SWIFT has
divided all message into 9 categories.
There are 219 message formats which
are fixed. These are called
Message Types ( MT for short).
20
 Usefulness of Standardized
Formats
 Minimizes interpretation of
instructions.
 Hastens execution of instructions.
 Enables automatic processing of
messages.
 Manual intervention eliminated.
 Computers can “read” formatted
messages.
21
 Details of categories of MT
 Category 1 - Customer Payments and Checks
 Category 2 - Financial Institution Transfers
 Category 3 –Foreign
– Exchange, Money Markets
and Derivatives
 Category 4 – Collections and Cash Letters
 Category 5 - Securities Markets
 Category 6 – Commodities and Syndications
 Category 7 – Documentary Credit and Guarantees
 Category 8- Travellers Cheques
 Category 9- Cash Management and Customer
Status
Common Group Messages
22
 Details of MT types
Category 1 – Customer Payments and Checks

MT-101 Request for transfer

MT-102 Multiple Customer Credit Transfer
MT-103 Single customer credit transfer
MT-104 Direct debit and Request for Debit Transfer Message
MT-105 Edi-fact Envelope
MT-107 General Direct Debit Message
MT-110 Advice of Cheque
MT-111 Request for stop payment of a Cheque
MT-112 Status of a request for stop payment of a Cheque
MT-199 Free Format Message
23
 Category 2 Financial Institution Transfers
MT-200 Financial Institution transfer for its own account
MT-201 Multiple Financial Institution Transfer for its own account
MT-202 General Financial Institutional Transfer
MT-203 Multiple General Financial Institution transfer
MT-204 Financial markets direct debit message
MT-205 Financial institution transfer execution
MT-207 Request for financial institution transfer
MT-210 Notice to receive
MT-299 Common Group

24
 Category 3
Foreign Exchange , Money Markets and Derivatives

MT-300 Forex Exchange Confirmation

MT-304 Advice/Instruction of a Third Party Deal
MT-305 Foreign Currency Option Confirmation
MT-306 Foreign Currency Option Confirmation
MT-320 Fixed loan/Deposit confirmation
MT-321 Instruction to Settle a Third Part Loan/Deposit
MT-330 Call /Notice Loan/Deposit Confirmation
MT-340 Forward Rate Agreement Confirmation
MT-341 Forward Rate Agreement Settlement Confirmation

CONTD…..

25
 Category 3
Foreign Exchange , Money Markets and Derivatives(contd..)

MT-350 Advice of loan/deposit interest payment

MT-360 Single Currency interest Rate Derivative Confirmation
MT-361 Cross Currency Interest Rate Swap confirmation
MT-362 Interest Rate reset/Advice of payment
MT-364 Single Currency interest Rate Derivative
Termination/ Re couponing Confirmation
MT-365 Cross Currency interest Rate Swap Termination
/ Re couponing Confirmation
MT-370 Netting Position Advice
MT-380 Foreign Exchange Order
MT-381 Foreign Exchange Order Confirmation
MT-399 Common group

26
 Category 4
Collections and Cash Letters
MT-400 Advice of payment
MT-410 Acknowledgement
MT-412 Advice of acceptance
MT-416 Advice of non-payment / non-acceptance
MT-420 Tracer
MT-422 Advice of fate and request for instructions
MT-430 Amendment of instruction
MT-450 Cash letter credit advice
MT-455 Cash letter credit adjustment advice
MT-456 Advice of dishonour
MT-499 Common group
27
 Category 5 Securities Markets
MT-500 Instruction to Register
MT-501 Confirmation of Registration or Modification
MT-502 Order to Buy or Sell
MT-503 Collateral Claim
MT-504 Collateral Proposal
MT-505 Collateral Substitution
MT-506 Collateral and Exposure Statement
MT-507 Collateral Status and Processing Advice
MT-508 Intra-Position Advice
MT-509 Trade Status Message
MT-510 Registration Status and Processing Advice
28

category 5 continued
 Category 5 Securities Markets
contd.
MT-513 Client Advice of execution
MT-514 Trade Allocation instruction
MT-515 Client confirmation of purchase or Sale
MT-516 securities Loan confirmation
MT-517 Trade Confirmation Affirmation
MT-518 Market side Securities Trade Confirmation
MT-519 Modification of Client details
MT-524 Intra Position instruction
MT-526 General securities Lending /Borrowing Message
MT-527 Tri-party Collateral Instruction
MT-530 Transaction processing Command
MT-535 Statement of holdings
MT-536 Statement of Transactions
MT-537 Statement of pending Transactions
MT-538 Statement of Intra position Advices
MT-540 Receive Free
category 5 continued29
 Category 5 Securities Markets contd.
MT-541 Receive against payment
MT-542 Deliver Free
MT-543 Deliver against payment
MT-544 Receive free confirmation
MT-545 Receive Against Payment Confirmation
MT-546 Deliver Free Confirmation
MT-547 Deliver Against Payment Confirmation
MT-548 Settlement Status and Processing Advice
MT-549 Request for Statement/Status Advice
MT-558 Tri-party Collateral Status and Processing Advice
MT-559 Paying Agent’s Claim
MT-564 Corporate Action Notification
MT-565 Corporate Action Instruction
MT-566 Corporate Action Confirmation
category 5 continued

30
Category 5 Securities Markets contd.
MT-567 Corporate Action Status and Processing Advice
MT-568 Corporate Action Narrative
MT-569 Tri-party Collateral and Exposure Statement
MT-575 Report of Combined Activity
MT-576 Statement of Open Orders
MT-577 Statement of Numbers
MT-578 Settlement Allegement
MT-581 Collateral Adjustment Message
MT-586 Statement of Settlements Allegements
MT-599 Common group

31
 Category 6
Commodities and Syndications
MT-600 Commodity Trade Confirmation
MT-601 Commodity Option Confirmation
MT-604 Commodity Transfer/Delivery Order
MT-605 Commodity Notice to Receive
MT-606 Commodity Debit Advice
MT-607 Commodity Credit Advice
MT-608 Statement of a Commodity Account
MT-620 Commodity Fixed Loan/Deposit Confirmation
MT-670 Standing Settlement Instruction Update Notification
Request
MT-699 Free Format Message
32
 Category-7
Documentary Credits and Guarantees
MT-700 Issue of Documentary Credit
MT-701 Issue of Documentary Credit
MT-705 Pre-advice of Documentary Credit
MT-707 Amendment to a Doc. Credit
MT-710 Advice of a third Bank’s doc. Credit or a Non-Bank’s
Documentary Credit
MT-711 Advice of a third Bank’s doc. Credit or a Non-Bank’s
Documentary Credit
MT-720/721 Transfer of a doc. Credit
MT-730 Acknowledgement
MT-732 Advice of discharge
MT-734 Advice of refusal
MT-740 Authorization to reimburse
MT-742 Reimbursement claim
MT-747 Amendment to an authorization to Reimburse

33

category 7 continued
 Category 7
Documentary Credits and Guarantees contd.

MT-750 Advice of discrepancy

MT-752 Authorization to pay/accept or negotiate
MT-754 Advice of payment/acceptance/negotiation
MT-756 Advice of reimbursement or payment
MT-760 Guarantee/ Standby Letter of Credit
MT-767 Guarantee / Standby Letter of Credit
amendment
MT-768 Acknowledgement of a Guarantee/
Standby Letter of Credit
MT-769 Advice of reduction or release
MT-799 Common group 34
 Category 8
Travellers Cheques

MT-800 T/C sales and settlement advice ( single)

MT-801 T/C multiple sales advice
MT-802 T/C settlement advice
MT-824 T/C inventory destruction /cancellation
notice

35
 Category 9
Cash Management and Customer Status
MT-900 Confirmation of debit
MT-910 Confirmation of credit
MT-920 Request message
MT-935 Rate change advice
MT-940 Customer statement message
MT-941 Balance report
MT-942 Interim transaction report
MT-950 Statement message
MT-970 Netting statement
MT-971 Netting balance report
MT-972 Netting interim statement
MT-973 Netting request message
MT-985 Status enquiry
MT-986 Status report
MT-999 Free Format Message
36