BoB World: How Bank Of Baroda's App Scam Has Sent Shockwaves To Indian Banking System

Mobile application, BOB World was launched with the main aim to provide an all-inclusive and seamless virtual banking experience encompassing all its digital banking services, who knew it would trap one of the largest PSU banks in India, Bank of Baroda into a controversial scandal. The scam is so deep-rooted, jeopardizing most likely thousands of customers' bank account security, that it has baffled investors, citizens and even the banking sector on a larger scale.

As per reports, many banks are now investigating their mobile applications to avoid any scrutiny from RBI. Digital banking is one of the mediums of earning profits, it would be disappointing if they were barred from onboarding or even worse banned from carrying any business by RBI. Because the Bank of Baroda faced exactly that from the central bank earlier this month for its BOB World app.

Nevertheless, the problem in Bank of Baroda's BOB World has been circulating since July, it only came to light and received attention when RBI banned the app on October 10 from onboarding new customers. The matter could get worse for Bank of Baroda as RBI is most likely to intervene in the fraud. The bank has suspended dozens of employees over irregularities.

Bank of Baroda shares continued to fall for a second consecutive day on Monday. At the time of writing, the stock traded at Rs 198.85 apiece, down by 1.71% on BSE. The stock was near its intraday low of Rs 198.15 apiece. Last week, on Friday, the stock tumbled by 1.4% on the exchange.

But How Did It All Begin?

The first sign of illegal onboarding 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.

On October 10, RBI directed the Bank of Baroda to suspend, with immediate effect, any further onboarding of their customers onto the 'Bob World' mobile application. This action is based on certain material supervisory concerns observed in the manner of onboarding their customers onto this mobile application.

RBI added, "Any further onboarding of customers of the bank on the 'bob World' application will be subject to rectification of the deficiencies observed and strengthening of the related processes by the bank to the satisfaction of RBI." Also, the central bank further directed BoB to ensure that already onboarded 'Bob World' customers do not face any disruption on account of this suspension.

Following RBI's direction, the Bank of Baroda clarified saying, "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."

On October 11, the bank assured its existing customers that they would not face any disruption whatsoever and would continue to enjoy uninterrupted services on the Bank's Bob World mobile app.

But it was only the beginning of one of the most shocking mobile app scams. People familiar with the matter told ET on October 18, days after RBI's action, that 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.

As per reports, Bank of Baroda has suspended at least 60 employees in the matter.

Bank of Baroda is yet to clarify the suspension of employees and the full-scale of the fraud in the BOB World app. For now, the Indian banking system is shocked and some of them are reportedly in the process of investigating their mobile applications.