Bank of Baroda shares sink over 2% after RBI bans lender from adding new customers on bob World app

The Reserve Bank of India (RBI) had received complaints from Bank of Baroda customers that some of the bank employees were using the wrong mobile numbers to meet their target of adding new customers.

The bob World app has 3 crore active customers as of FY23. As many as around 86 lakh transactions take place on the app every day. Photo: File/Representational

Bank of Baroda Share Price: Shares of Bank of Baroda slipped 2.19 per cent, or Rs 4.70, at Rs 209.50, in early morning deals on BSE on Wednesday, a day after the RBI banned the bank from adding new customers on its 'bob World' mobile app.

The stock was priced at Rs 214.20 at close on Tuesday and opened at Rs 209.60 on Wednesday before sinking further.

Why is the RBI tightening the noose on Bank of Baroda?

The Reserve Bank of India (RBI) had received complaints from Bank of Baroda customers that some of the bank employees were using the wrong mobile numbers to meet their target of adding new customers.

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The RBI swung into action on Tuesday and ordered Bank of Baroda to not add new customers to its bob World app.

The central bank, however, let the existing Bank of Baroda customers continue using the app.

"There are supervisory concerns about customer onboarding on the app," said RBI in its statement.

What will be the effect of the RBI's order?

The bob World app has 3 crore active customers as of FY23.

As many as around 86 lakh transactions take place on the app every day.

A total of 87 per cent of the bank's fund transfers were done only through the app, while it was also used for KYC purposes.

In the first quarter of the current financial year, 98 per cent of the new savings and 91 per cent of the new current accounts were added only through the bob World app.

While around 89 per cent of personal loans were given through the app, 74 per cent of retail loans were also given through the digital medium in Q1.

Zee Business research says there may be an impact on assets and liabilities of Bank of Baroda after the RBI ruling.

What Bank of Baroda says to its customers

In its reaction to the RBI's decision, Bank of Baroda says to its customers, "There will be no impact on any services of the bank on existing customers. bob World is a completely secure platform. Action on 'bob World' does not affect other digital services. New customers can use net banking, WhatsApp Banking, Dabit Card and ATM.

"We will take steps to correct the shortcomings of the app and will work together with RBI to remove the shortcomings. There will be no impact on the bank's business and growth plan."

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Reserve Bank of India (RBI)