Explained: The Digital Banking App Controversy That Landed Bank Of Baroda In A Soup

The Bank of Baroda (BoB) has reportedly suspended more than 60 employees over irregularities pertaining to the onboarding of new customers to the bank’s digital app, ‘bob World’.

The suspended employees include 11 assistant general managers, who generally hold positions of area managers and zonal heads and oversee heads of over 25 branches, sources aware of the development told Moneycontrol.

“Mostly, people from the Vadodara region have been suspended now. We may see this drive continuing in other zones like Lucknow, Bhopal, Rajasthan and some areas of eastern Uttar Pradesh,” a source told the publication.

What Is The Row About?

At the centre of the issue is a possible fraud while signing up customers for the internet banking app. In July, Al Jazeera and The Reporters’ Collective in a report said that employees at some branches of Bank of Baroda linked the bank accounts of customers with unrelated mobile numbers and signed them up for bob World. 

The mobile app, like most other banking apps, aims to offer customers an enhanced experience in digital banking in many aspects, including getting loans, savings, and investing, as well as features like bill payments and bus and hotel booking.

The report said that the bank’s employees, in order to meet the steep targets for the sign ups for the digital app, linked bank accounts which didn’t have any mobile numbers with the numbers of staff, sanitation and security workers. Following the registration, the employees deregistered the bank accounts from the app and then used the same mobile numbers to link another set of bank accounts.

To that end, one nodal officer was deputed at each branch to ensure the task was accomplished, the publication reported.

While Bank of Baroda denied the allegations then, it ordered an internal audit into the allegations.

It must be noted that in its Q4 and FY23 earnings statement, the bank said it had 30 Mn active users on the bob World platform, with a total of 53 Mn downloads. This grew from 19.6 Mn active users and 34 Mn downloads in the corresponding period of the prior fiscal year.

RBI’s Actions & More Allegations 

Months after the publishing of the aforementioned report, the Reserve Bank of India (RBI) on October 10 asked Bank of Baroda to suspend onboarding customers on the bob World app with immediate effect.

“The Reserve Bank of India 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. This action is based on certain material supervisory concerns observed in the manner of onboarding of their customers onto this mobile application,” the RBI said. 

“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,” it added.

Meanwhile, another report by Al Jazeera and The Reporters’ Collective last week, citing Bank of Baroda’s audit and internal records, said that some of its agents stole INR 22 Lakh from 362 customers following linking of their bank accounts with unrelated mobile numbers.

The Path Ahead 

Following this, Bank of Baroda’s head office reportedly asked the concerned managers to “initiate necessary action for recovery and restoration of money in customer accounts”.

As per the latest report about the suspension of the bank’s officials, the move is part of the rectification drive undertaken by Bank of Baroda. 

The public sector bank is also expected to file a rectification report based on an audit of bob World to the RBI in the coming weeks.

A bank official told Moneycontrol earlier this week that it expects the RBI to revoke the ban on onboarding new customers on the app before Diwali.

Since the beginning of October, shares of Bank of Baroda have fallen over 6% so far. On Wednesday (October 18), the bank’s shares ended the session 1.7% lower at INR 203.7 on the BSE.