India’s second-largest public sector bank — Bank of Baroda — is facing app troubles. The country’s apex bank RBI has directed Bank of Baroda not to add customers to its mobile app following lapses in the onboarding process. The central bank’s action reportedly follows complaints that some BoB employees used mobile numbers of strangers to onboard customers for mobile banking to meet enrolment targets. Bank of Baroda is the second-largest public-sector bank and the third-largest state-owned lender in terms of active mobile banking customers. The RBI had previously placed restrictions on the country’s top private lender HDFC Bank’s digital operations for more than a year, before lifting curbs in March 2022.
The Bank of Baroda’s app is called ‘BoB World’. Bob World app has 8.1 million daily transactions, while 43% of time deposits are obtained through the app, the bank had said in its quarterly presentation in August.
What has RBI told Bank of Baroda
The Bank of Baroda has been directed to ensure that existing app users do not face any disruption. “This action is based on certain material supervisory concerns observed in the manner of onboarding of their customers onto this mobile application. 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 regulator said in a statement.
What Bank of Baroda said
“While the bank has already carried out corrective measures to address the concerns of RBI, we have initiated further steps to plug any remaining gaps identified and we will work closely with RBI to address their concerns at the earliest to their satisfaction,” Bank of Baroda said in a statement. The bank said that new customers will have access to other digital channels, including net banking and WhatsApp banking, besides debit cards and ATMs.
BoB had said earlier that it has checks in place to ensure the app cannot be linked to a mobile number more than once. The lender had also said that customers need to follow a two-factor authentication process to register or update a mobile number.
According to the bank, 87% of the bank’s funds transfers using the immediate payment system are through the app. The restriction could impede new account openings for the bank as the mobile app is a primary channel for a large section of customers. The app also serves non-customers by enabling account opening through video KYC.
In its presentation following the FY23 results, the bank had said that its app had over 3 crore activated users, with 41 lakh customers doing 86 lakh transactions every day. In December 2020, HDFC Bank had faced a temporary ban on onboarding new credit card customers or from launching new digital products as a punitive measure for outages in digital channels. However, the action against BoB is the first time RBI has asked a lender to block the mobile banking channel for new customers.
“Bank of Baroda will be allowed to onboard customers to its Bob World app only after rectifying certain deficiencies,” the RBI said on October 10, without giving any details about the issues.
