The “Bank Bachao Desh Bachao Manch” has requested the Reserve Bank of India (RBI) to appoint independent Information System (IS) Auditors to conduct in depth investigation in all Banks having mobile banking apps in the backdrop of the banking regulator taking action against Bank of Baroda (BoB) due to certain material supervisory concerns in the manner of onboarding their customers onto its mobile application.

The civil society forum, in a letter to RBI Governor Shaktikanta Das, has expressed apprehension about the drive initiated by various banks to onboard customers on mobile banking apps through business correspondents as well as employees. This has resulted in customers losing substantial amounts through frauds perpetrated by fraudsters, it alleged.

The forum’s Joint Convenors’ Soumya Datta and Biswaranjan Ray stated that under such drives impossible targets are set for the banks’ branch level functionaries on any banking channel activity -- selling of third party products, opening of current accounts, onboarding customers for mobile banking app, etc., often leading to irregular and unlawful acts being perpetrated by them. Further, the authorities turn a blind eye to such activities as long as the targets are achieved.

To achieve the targets, branch staff resort to malpractices to satisfy the authorities, they alleged.

“It is indeed a matter of consternation that the Banks are breaching the basic fiduciary responsibility (to protect the interest of the common depositors who repose their utmost faith in the security and safety of the banking system) that they are supposed to uphold all the time,” the Joint Convernors said in a letter to the Governor.

Besides appointment of IS Auditors, the Forum said RBI should instruct all banks not to set impossible to achieve targets for branch staff. This will ensure that the staff doesn’t resort to malpractices to satisfy the authorities.

The Forum wants RBI to direct all Banks to investigate the operations of business correspondents to detect malpractices, if any, like substitution of bio-metric details of customers at the time of opening of accounts, and monitoring of customer service kiosks.

On October 10th, the RBI directed BoB to suspend, with immediate effect, any further onboarding of their customers onto the ‘bob World’ mobile application.

The central bank said this action (taken in exercise of its power under Section 35A of the Banking Regulation Act, 1949) is based on certain material supervisory concerns observed in the manner of onboarding their customers onto “bob World.

BoB, in a statement, said: “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.”

A July 2023 Al Jazeera report, alleged that faced with a stiff to boost mobile banking app registrations, desperate BoB branch officials resorted to workaround, fetching the list of bank accounts not linked to mobile numbers, linking them to any mobile numbers they could gather – of bank staffers, sanitation and security workers and their relatives – to generate the one-time password (OTP) needed to join the app, and signing up these accounts from the back end.

The employees would then de-register these customers from the app and reuse the same mobile number in the same manner with other bank accounts, per the report.

BoB did not reply to an email from businessline seeking comments on the aforementioned report and the action it has taken.