BoB shares slip 4% after RBI bars new customer onboarding to mobile app

Shares of state-owned lender Bank of Baroda dipped nearly 4% in early trade on Wednesday after the Reserve Bank of India (RBI) directed the bank to stop on-boarding of customers to its mobile banking app with immediate effect.

The scrip opened a gap down at ₹209.60 and slipped tan o intra-day low of ₹206.25, about 3.71% down as compared to the previous session, on the Bombay Stock Exchange (BSE). The stock currently is trading near its 52-week high of ₹219.60 achieved on September 18, 2023. At the current share price, BoB's m-cap stands at ₹1,07,150.62 lakh crore.

After the RBI's order on Tuesday, BoB issued a statement, saying the bank has initiated "corrective measures" to address the concerns raised by the banking regulator.

It also says that the current decision of the RBI will not have any "material impact" on the bank’s overall business and growth plans. 

"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," says Bank of Baroda.

The bank assures the existing customers that they will not face "any disruption" whatsoever and will get uninterrupted services on the Bank’s bob World mobile app. 

The order also does not impact any of the bank’s other digital banking channels such as net banking, WhatsApp banking, debit cards, ATMs, etc., for servicing its existing customers as well as for onboarding of new customers. 

BoB says its mobile banking application is "fully secure" with robust security controls and features. "The bank has always endeavoured to provide seamless digital banking services to its customers and over the last few years... has made significant investments in technology".  

Notably, the RBI has said its action is based on certain material supervisory concerns observed in the manner of onboarding of their customers onto this mobile application.

“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."

The bank has also been further directed to ensure that already onboarded ‘bob World’ customers do not face any disruption on account of this suspension.

The regulator’s action comes nearly three months after India’s second-largest public sector bank denied media reports claiming that its officials used phone numbers of strangers to bump up users on its mobile banking app, bob World. Al Jazeera alleged that the state-run bank’s officials linked bank accounts to unrelated mobile numbers to meet app onboarding targets.