RBI asks Bank of Baroda to suspend further customer onboarding on ‘bob World’ mobile app

The Reserve Bank of India has directed Bank of Baroda, India’s second largest state-owned lender after State Bank of India, to suspend any further onboarding of its customers onto the ‘bob World’ mobile application with immediate effect.

The central bank, in exercise of its power under section 35A of the Banking Regulation Act, 1949, has stated that the action against the lender is based on certain material supervisory concerns observed in the manner of onboarding of new 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 central bank said. 

The RBI has further directed the bank to ensure that already onboarded and existing ‘bob World’ customers do not face any disruption on account of this suspension.

In July this year, it was reported that Bank of Baroda officials linked bank accounts to unrelated mobile numbers in order to achieve stiff onboarding targets. 

The news report noted that in March 2022 the Bank of Baroda officials from the Bhopal zone were given a target of onboarding at least 150 existing bank customers for the bank’s new app, “bob World", which was launched six months before.

Al Jazeera claimed that the Bank of Baroda employees from Madhya Pradesh, Uttar Pradesh, Rajasthan, Gujarat and Jharkhand also adopted the widely prevalent modus operandi to achieve the target as they were struggling to get people to sign up for the app. The officers reportedly said their regional office kept tabs on them and reprimanded them for poor performance. 

The bank denied the reports and said that unauthenticated or non-customer mobile numbers for boosting app registrations are factually incorrect.

The bank, on its part, said: "The point raised on using unauthenticated, stranger’s or non-customer mobile numbers for boosting app registrations is not factually correct as one mobile number can be counted with only one mobile app at any point in time. The Bank targets only active users who can get onboarded only through the system controls in place, rather than mobile app downloads or registrations."

Shares of Bank of Baroda closed trading at Rs 214.20, up by 1.16 per cent.

Earlier in the day, it was reported that the Bank of Baroda may raise Rs 10,000 crore ($1.35 billion) through the issuance of infrastructure bonds to finance infrastructure and affordable housing. These long-term debt instruments are exempt from the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR) as per Reserve Bank of India (RBI) guidelines.

As of September 22, bank credit growth was at 20 per cent year-on-year while deposit growth was at 13.2% over the same period, latest RBI data showed.

The bank's decision will be discussed further in a board meeting scheduled for Wednesday, October 11, where the issuance of a Rs 2,000 crore ($270 million) tier-1 bond will also be considered. This fund-raising mechanism has been previously utilised by other banks such as the State Bank of India, Canara Bank, and ICICI Bank.

Bank of Baroda reported 17 per cent on-year growth in total advances at Rs 10.3 lakh crore, with domestic advances up 16.6 per cent on-year. International book, the bank said, rose 21 per cent YoY (6.4 per cent QoQ). Domestic retail loans grew 22.5 per cent YoY (5.4 per cent QoQ), as per the Q2 provisional business update.

Total deposits grew 14.6 per cent on-year to Rs 12.5 lakh crore, with domestic deposits up 12 per cent on-year. International deposits jumped 32 per cent on-year. Domestic CASA deposits jumped 4.4 per cent on-year.

Also read: Sensex reclaims 66k; Nifty rises 177 points; GMDC rallies 20%; Coal India up 5%

Also read: Nykaa, Maruti Suzuki, RIL: Insurance majors upped stake in these 12 firms ahead of Q2 results season