A notice by the Reserve Bank of India (RBI) on Tuesday has left the shares of Bank of Baroda bleeding today, being already down more than 3% since morning,
The RBI on Tuesday directed one of the country's largest public sector banks, Bank of Baroda, to stop onboarding new customers onto its mobile application. The bank has also been instructed to ensure that no existing customer of the application faces any disruption due to this suspension.
In an official notice yesterday, RBI stated, "The Reserve Bank of India, exercising its power under Section 35A of the Banking Regulation Act, 1949, has directed Bank of Baroda to suspend, with immediate effect, any further onboarding of customers onto the 'bob World' mobile application."
The action is based on "certain material supervisory concerns" observed in how customers were onboarded onto this mobile application. As per Business Standard, any future onboarding of Bank of Baroda customers on the 'bob World' application will be contingent upon rectifying the identified deficiencies and the strengthening of the relevant processes by the bank to the satisfaction of RBI," the notice elaborated.
The notice also clarified, "The bank has been further directed to ensure that customers who are already onboarded on 'bob World' do not face any disruption due to this suspension."
The RBI action came after a report in July this year said that some of the bank employees were involved in fake onboarding of bank customers onto BoB World. As per Indian Express, the media report at that time had mentioned that a few employees of the bank¡¯s?Bhopal?zonal office linked some bank accounts to the mobile numbers of different people and registered them on the mobile app. This was aimed at increasing the registration number of BoB World.
Also Read:?Did You Know Why?RBI's?First?Governor?Never Signed Any Currency?Notes
Following the RBI direction, the?Bank of Baroda released a clarification?stating it has already carried out corrective measures to address the concerns highlighted by the RBI and is taking further steps to plug any remaining gaps.?
The statement read: ¡°While the Bank has already carried out corrective measures to address the concerns of the RBI, we have initiated further steps to plug any remaining gaps identified and we will work closely with the RBI to address their concerns at the earliest to their satisfaction.¡±
Also Read:?How?RBI?Creates & Distributes Indian Rupee Banknotes
This ban comes after RBI had already imposed a fine of Rs 30 lakh on Bank of Baroda earlier this year, for deficiencies in regulatory compliance related to Know-Your-Customer (KYC) norms.
The Central Bureau of Investigation (CBI) had recently arrested five individuals, including two retired officials from the Rail Land Development Authority (RLDA) and Bank of Baroda, in relation to an alleged misappropriation of Rs 31.50 crore.?The CBI registered the case based on a complaint from RLDA, alleging it had incurred a loss of Rs 31.50 crore due to actions by unidentified individuals.
"It was claimed that RLDA had initially invested an approximate amount of Rs 35 crore for one year in the form of a fixed deposit at the Bank of Baroda, Vishwas Nagar branch, Shahdara, Delhi. The maturity proceeds were supposed to be reinvested for a period of three months," a CBI spokesperson elaborated, as per the report.
The spokesperson added that the Bank of Baroda had allegedly invested only Rs 3.50 crore and diverted the remaining Rs 31.50 crore to various shell companies in collusion with bank officials, RLDA officials, and private individuals.
For the latest and more interesting financial news, keep reading Indiatimes Worth.?Click here.