BoB World App Case: More Banks May Be Pulled Into The Mess—BQ Exclusive

Internal checks are on at various public sector banks to see if any rules were breached in on-boarding mobile app users, the first of the two people quoted above said on the condition of anonymity. Some officials at these banks have received letters from higher-ups seeking explanations.

Right now, the Reserve Bank of India is focused on the Bank of Baroda, but some action is expected on other banks as well in the coming weeks, this person added on condition of anonymity.

The allegations of bank employees fraudulently linking mobile numbers with accounts of customers—all to boost the active user base of the app—are prevalent across banks, the first person quoted above confirmed.

While BQ Prime couldn’t confirm the names of other banks, the second of the two people mentioned above said that due to the competitive nature of this space, the practice has been going on at other banks as well.

Queries sent to Bank of Baroda on Thursday did not yield a response.

Internal checks are on at various public sector banks to see if any rules were breached in on-boarding mobile app users, the first of the two people quoted above said on the condition of anonymity. Some officials at these banks have received letters from higher-ups seeking explanations.

Right now, the Reserve Bank of India is focused on the Bank of Baroda, but some action is expected on other banks as well in the coming weeks, this person added on condition of anonymity.

The allegations of bank employees fraudulently linking mobile numbers with accounts of customers—all to boost the active user base of the app—are prevalent across banks, the first person quoted above confirmed.

While BQ Prime couldn’t confirm the names of other banks, the second of the two people mentioned above said that due to the competitive nature of this space, the practice has been going on at other banks as well.

Queries sent to Bank of Baroda on Thursday did not yield a response.

How BoB World App Saga Unfolded

In July, Al Jazeera, in collaboration with The Reporters' Collective, reported, citing whistleblower complaints alleging that employees were pressured to bring up customer numbers on the mobile app.

After this news report, the RBI conducted a special audit in Bank of Baroda to figure out the discrepancies with regards to customer onboarding on BoB World App, the first person quoted above said. While the bank had conducted an internal audit, the regulator was not satisfied with the results, this person said.

Based on its own audit and considering BoB's responses in the matter, the RBI on Oct. 10, barred onboarding of new customers on to the Bob World app, until further notice.

So far, the bank has suspended at least nine BoB officers of the executive cadre in the case, according to the people quoted above. A third person, an executive at Bank of Baroda, confirmed this number.

The suspended officers are largely from the bank’s branches across Gujarat, the first person said. Regional heads of the bank, suspected in this case, have been asked to work as branch heads for the time being, the first person said. Lower-level officers have been transferred to other branches, this person said.

Over the last two months, Bank of Baroda has been conducting a tighter investigation into the case, looking at branch level data, the people quoted above said.

As part of its investigation, the bank looked at individual accounts suspected to have seen fraudulent linkage of mobile numbers. It also looked at employee-level conduct, before seeking written explanations, the people quoted above said.

The action taken was after considering the written explanations by the employees. While this suspension is interim in nature, a final decision will be taken after a thorough investigation is concluded in individual cases. This may take between 3-6 months, the first person said.

Since the actions did not lead to any monetary losses for the bank or its customers, action may not lead to termination, the first person said.

Cases like these, if prevalent across banks, are mainly due to loopholes in technology that often get exploited, according to Rishi Agrawal, chief executive officer and co-founder of TeamLease RegTech.

"The rate at which our financial services are growing, we need compliance in technology and better fraud detection systems to ensure that such things don't happen," he said.