Shares of Bank of Baroda slumped on Wednesday after the central bank prevented it from onboarding new customers to its mobile banking app.
What Happened: The Reserve Bank of India (RBI) has directed Bank of Baroda to halt new customer registrations for its “BoB World” mobile banking app.
The RBI took this step due to concerns about how customers were being added to the app and has exercised its authority under the Banking Regulation Act, 1949, Section 35A, which allows it to issue such directives if a bank’s actions could harm depositors or the bank itself.
What Needs To Be Fixed: BoB must address the issues and enhance its processes to the RBI’s satisfaction before it can resume new customer sign-ups. The bank must also ensure that existing “BoB World” customers experience no disruptions.
BoB said it has taken corrective actions in response to the RBI’s concerns and has committed to providing uninterrupted services for “BoB World” users. This directive does not impact the bank’s other digital channels, the firm said.
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The RBI’s move follows media reports from July that said some bank employees falsely registered customers for BoB World by linking bank accounts to different mobile numbers.
BoB introduced the “BoB World” mobile banking app in September 2021 and had onboarded three crore customers by the end of fiscal year 2023. The app saw a significant number of daily financial and non-financial transactions.
Price Action: Bank of Baroda’s share price was down 2.05% at ₹209.90 at the start of trade on Wednesday.
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