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.
But How Did It All Begin?
The first sign of illegal on boarding in Bank of Baroda's BOB World App was exposed by AI Jazeera in July 2023.
As per the Al Jazeera report, it was known that the bank's employees were given the task of onboarding customers on the BOB World mobile app when it was launched in September 2021. The task was extensive, and employees struggled to onboard people while they feared getting poor performance reviews from their regional offices. Desperate to succeed in the task at hand, a Bank of Baroda employee situated in Bhopal revealed to AI Jazeera that he and his colleagues learned of a workaround from peers in other branches. This employee revealed that they would fetch out the list of bank accounts which were not linked with mobile numbers, and then the employees would link these accounts to any mobile numbers they could gather such as bank staffers, sanitation and security workers and their relatives. The goal of doing so was to generate the one-time password (OTP) which is required to join the application and sign up these accounts. The next step by these employees was to deregister these customers from the app and reuse the same mobile numbers to repeat the process all over again.
Even a nodal officer reportedly from the regional office in Bhopal joined the practice by giving his and his wife's phone numbers to link with the accounts. AI Jazeera cited an email which pointed out the scale of impact on bank accounts. For instance, in the Bhopal zone, the news channel found out that close to 1,300 mobile numbers were tied to anywhere from 30 to 100 bank accounts, putting nearly 62,000 bank accounts at risk. This will be on average 47 bank accounts linked to a single mobile number. As per the policy of Bank of Baroda policy, one mobile number can be linked to at least eight bank accounts, however, one mobile number cannot be linked to multiple mobile banking apps. Bank of Baroda had denied the findings in the AI Jazeera report. But when RBI stepped into the same matter, Bank of Baroda carried out its investigation, finding many employees carrying this fraudulent act.
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.
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