The Reserve Bank of India (RBI) has told lenders to link their internal software with the SWIFT interbank messaging system by the end of April, and to alter a range of other protocols with immediate effect, as fallout from an alleged $1.77 billion fraud at Punjab National Bank (PNB) continues to swell.

In what has been dubbed the biggest loan fraud in India’s history, the No. 2 state-run lender PNB has alleged that two employees at a Mumbai branch colluded with firms linked to well-known jewellers Nirav Modi and his uncle, Mehul Choksi.

The bank alleges the employees issued unauthorised letters of undertaking, or guarantees, that allowed the firms to secure credit from overseas branches of other, mostly Indian banks.

PNB says the fraud dates back to 2011 and stayed undetected as the employees did not enter the transactions in PNB’s core software after sending instructions to overseas banks through SWIFT.

Many Indian banks, including PNB, have not linked their core banking systems with the SWIFT network, which is widely used by global banks to communicate with each other on transactions.

RBI, which supervises lenders, has moved to tighten regulations. In a letter dated Feb. 20, a copy of which Reuters saw on Friday, the RBI ordered lenders to comply with more than two dozen items within set timelines.

“The recent detection of a large-value fraud ... indicates ineffective implementation of the prescribed controls,” the RBI said in the memo, sent to heads of all commercial banks.

It said banks must not send any transaction message on the SWIFT system or issue any loan or guarantee without ensuring it was reflected in the core banking or accounting system. It asked banks to integrate SWIFT with their systems by April 30.