Bank of Baroda has been in the eye of a storm after a potential fraud in the process of signing up customers for its Internet banking app. The employees at certain Bank of Baroda branches allegedly linked customers' bank accounts with unrelated mobile numbers and enrolled them on the "Bob World" app, Al Jazeera reported in July.
What exactly happened?
This mobile app, similar to other banking apps, offers customers various digital banking services, including loan access, savings, investment options, bill payments, and even booking buses and hotels. According to the report, bank employees resorted to linking bank accounts without associated mobile numbers to the contact details of various personnel, including staff, sanitation workers, and security personnel to meet demanding sign-up targets for the digital app.
After the initial registration, these employees would then deregister the bank accounts from the app and reuse the same mobile numbers to link a different set of bank accounts. To oversee this process, each branch had a designated nodal officer, as reported by the publication. While Bank of Baroda initially denied these allegations, it later initiated an internal audit in response to the accusations.
What did the RBI say?
Now, the bank app has been banned by the RBI from onboarding new customers. The RBI has now mandated that the Bank of Baroda, the seventh largest in India by market cap, sign in new customers to the BoB World app after it rectifies the identified issues and strengthens the relevant processes to the regulator's satisfaction, as per ET.
Bank of Baroda takes action:
In response to this, the Bank of Baroda has taken action by suspending certain employees and launching an investigation to establish accountability. “Some employees have been suspended in Bhopal, Baroda and Rajasthan and a probe has been initiated. So far the suspensions are only in the smaller towns outside the metros,” a person familiar with the process told ET.