RBI asks Bank of Baroda to suspend new customer onboarding on its mobile app

Responding to the RBI's directions, the state-owned lender said it has already carried out corrective measures to address the concerns of the central bank, and has initiated further steps to plug any remaining gaps.

The bank does not expect the RBI's action to have a material impact on its overall business and growth plans.

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The Reserve Bank of India (RBI) has asked Bank of Baroda (BoB) to suspend further onboarding of customers onto the ‘bob World’, the lender’s mobile banking application.

“The RBI has, in exercise of its power, under section 35A of the Banking Regulation Act, 1949, directed Bank of Baroda to suspend, with immediate effect, any further onboarding of their customers onto the ‘bob World’ mobile application,” RBI said in a release

It said the action on the bank is based on certain material supervisory concerns observed in the manner of onboarding of their customers onto this mobile application.

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Under section 35A, the RBI has power to give directions to banks ‘to prevent the affairs of any banking company being conducted in a manner detrimental to the interests of the depositors or in a manner prejudicial to the interests of the banking company’.

The RBI directed BoB that any further onboarding of customers of the bank on the ‘bob World’ application will be subject to rectification of the deficiencies observed and strengthening of the related processes by the bank to the satisfaction of RBI.

The bank has also been directed to ensure that already onboarded ‘BoB World’ customers do not face any disruption on account of this suspension.

In a statement, BoB said that it has already carried out corrective measures to address the concerns of the RBI. It has initiated further steps to plug any remaining gaps identified. The lender also assured its customers that they will not face any disruption and will continue to enjoy uninterrupted services on BoB World mobile app.

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The bank said the order does not impact any of its other digital banking channels such as net banking, WhatsApp banking, debit cards, ATMs, for servicing existing customers as well as for onboarding of new customers.

The RBI action came after a media report in July this year said that some of the bank employees were involved in fake onboarding of bank customers onto BoB World. The report said that a few employees of the bank’s Bhopal zonal office linked some bank accounts to mobile numbers of different people and registered them on the mobile app. This was aimed at increasing the registration number of BoB World.

The lender launched its mobile banking app in September 2021. As of the end fiscal 2023, three crore customers were onboarded on BoB World platform, according to the bank’s Annual Report for 2022-23. At the end of fiscal 2023, the number of financial transactions on the mobile banking app stood at 1,864.7 lakh and non-financial transactions increased to 27,745 lakh. In the quarter ended June 2023, the number of daily financial and non-financial transactions on bob World stood at 81 lakh.

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