The Reserve Bank of India (RBI) on Wednesday (May 8) lifted the ban on Bank of Baroda (BoB), which it said had blocked the public sector lender’s access to customer information through its mobile banking application ‘Pop World’. Pop World was banned after the RBI said there were lapses in the lender’s process of onboarding customers through the mobile app.
What is the ban imposed on the bank?
In October last year, the RBI directed state-owned Bank of Baroda to suspend its customers’ access to the ‘PopWorld’ mobile application. The banking sector regulator said the inclusion of the bank’s customers in the application is subject to rectifying the deficiencies noticed by the bank and strengthening the relevant processes.
The lender has also been directed to ensure that existing domestic ‘Pop World’ customers do not experience any disruption due to the suspension. The RBI took action against the bank under Section 35A of the Banking Regulation Act, 1949, which empowers banks to “prevent the conduct of the affairs of any banking company prejudicial to the interests of depositors”. in a manner adverse to the interests of the banking institution”.
Why ban customer enrollment through app?
The RBI’s action against Bank of Baroda came after it found certain material supervisory concerns in the onboarding of its customers by Pop World. In July last year, a report said that some of the bank employees were involved in fraudulently inducting bank customers to Pop World.
Some employees of the bank’s Bhopal regional office linked some bank accounts with different people’s mobile numbers primarily to increase registration numbers in Pop World.
Accused of registering on a mobile app.
The lender said it had taken corrective measures to address the RBI’s concerns after the bank’s deregulation was imposed by the RBI.
“We have initiated further steps to bridge the remaining gaps identified and will work with RBI to address their concerns as soon as possible to their satisfaction,” the bank said in a stock exchange filing on October 10, 2023.
What has RBI done now?
In a filing to the bourses on Wednesday, Bank of Baroda said it has “informed the bank of its decision to immediately remove restrictions on PopWorld, the bank’s free mobile application for customers”. . The lender said it will now resume onboarding new customers through the mobile app.
How did RBI regulation affect banking?
The lender launched its mobile banking app in September 2021. At the end of the September 2023 quarter (before the ban), total daily financial and non-financial transactions at PopWorld stood at 7.95 million.
After the ban, these transactions fell to 7.19 million at the end of the December 2023 quarter. The percentage of Fixed Deposits (FDs) or Recurring Deposits (RDs) opened by Pop World was reduced from 35 per cent at the end of Q2FY24 to 28 per cent at the end of Q3 FY24.
