RBI Finally Lifts Ban From Bank of Baroda From Onboarding New Customers Through Mobile App

Yesterday, the Reserve Bank of India (RBI) lifted the restriction it had placed on the Bank of Baroda (BoB) regarding onboarding new customers through its mobile app ‘Bob World’. This decision comes over six months after the RBI initially imposed the restriction in October 2023 due to significant supervisory concerns.

RBI’s Initial Curbs

Utilizing its authority under Section 35A of the Banking Regulation Act, of 1949, the RBI cited specific supervisory concerns as the basis for its actions against the Bank of Baroda. Reports from July last year revealed that staff from BoB were associating bank accounts with unrelated mobile numbers to meet ambitious onboarding objectives.

In March 2022, officials from Bank of Baroda’s Bhopal zone were tasked with enrolling at least 150 existing bank customers on the newly launched “Bob World” app, introduced six months prior. Facing challenges in collecting sign-ups, employees from regions including Madhya Pradesh, Uttar Pradesh, Rajasthan, Gujarat, and Jharkhand resorted to similar tactics to achieve targets. They claimed that their regional office monitored their progress and criticized them for underperformance.

BoB’s Stance

Bank of Baroda replied to this by saying that the claim regarding the use of unverified or unrelated mobile numbers to inflate app registrations is inaccurate, as each mobile number can only be associated with one mobile app at a given time. Further, they said that the bank focuses on enrolling active users through established system controls, rather than solely relying on app downloads or registrations. But later, following the imposition of restrictions by the RBI, the bank clarified that it has implemented corrective actions to tackle the concerns raised by the RBI. Additionally, it stated that it is undertaking further measures to address any remaining issues.

Impact on Share Price

The shares of Bank of Baroda experienced a 2.04% increase in trading value, reaching Rs.267.8 per share at 10 am on Thursday, May 9th. The RBI’s decision to lift restrictions on Bank of Baroda’s ‘Bob World’ app may have boosted investor confidence, signalling improved prospects for the bank’s future as it resumes onboarding new customers after months of limitations.

Conclusion: The RBI’s decision to lift restrictions on Bank of Baroda’s ‘Bob World’ app comes after months of supervisory concerns. Bank of Baroda has responded by implementing corrective measures and further steps to address any remaining issues. This move signifies a positive step towards regulatory compliance and operational improvement for the bank.

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