Public sector bank, Bank of Baroda’s internal audit has reportedly uncovered a theft of Rs 22 lakh from 362 customers, with six individuals losing more than Rs 1.10 lakh.
Agents, known as business correspondents, linked mobile numbers on the customer’s consent forms to on-board them on to the ‘Bob World’ app apparently due to pressure from the bank to boost registration on the Bob World app. But then these agents stole money from the customer accounts through un-authorised mobile linking.
The scandal came to light following an expose by The Reporters’ Collective (TRC) and Al Jazeera.
The investigation revealed that bank agents had illicitly linked unauthorized mobile numbers to customer accounts that lacked a registered mobile number, to on-board them onto the bank’s new mobile banking app, “Bob World”. These unauthorized numbers included those of strangers or bank agents in remote areas.
These fraudulent practices were apparently due to pressure from the bank to boost registrations on its “Bob World” app, as reported by Al Jazeera.
In response to the scandal, the bank’s head office has now instructed the respective managers to initiate actions to recover and restore the stolen funds in customer accounts, the report said.
On October 10, 2023, the Reserve Bank of India (RBI) directed Bank of Baroda to halt the registration of new customers on the “Bob World” app due to “certain material supervisory concerns” regarding the on-boarding process for customers.
After the scam came to light, Bank of Baroda conducted a nationwide audit, verifying documents related to approximately 422,000 accounts suspected of being wrongly linked. However, bank employees claimed that this audit was an attempt to cover up the scandal and that they were instructed by regional offices to arrange and forge documents, Al Jazzera said in its report.
The internal auditors were primarily instructed to search for “Bob World” request letters and forms showing customer requests for the app service on their phones.
However, in most cases, these documents were not found. The reports also revealed many instances of accounts linked to the mobile numbers of strangers or “business correspondents” who are bank’s freelancing agents in the rural areas.
Report also revealed that unauthorized mobile numbers were linked to some of these accounts and later removed from the back-end. In some cases, customers provided one mobile number in the account-opening form, but a different number was linked to their account and registered on “Bob World”.
Incidentally, bank permits a single mobile number to be linked only with a maximum of eight bank accounts, only if they are within the same family. However, the audit found that many mobile numbers of business correspondents were linked with 10-60 accounts.
The audit also revealed that illiterate and underage customers were wrongly registered on the app. Many of the accounts under scrutiny were opened under the Pradhan Mantri Jan Dhan Yojana and were used for receiving subsidies directly from Center. This raises the doubt that there can be cases of subsidy amount stolen by bank agents.
In response to these findings, Bank of Baroda’s Chief General Manager B Elango sent a letter to all zonal and regional heads on August 10, 2023 stating that corrective measures must be taken to address the gaps in essential documents, Al Jazeera said in its report.
The Al Jazeera report also shared the ‘secretly-kept’ frustration of bank employees who had to perform the audit.
Bank employees alleged pressure from bank managers to forge documents to cover up the scam. Some tactics included adding fake signatures and thumbprints to account-linking consent forms with backdated dates. Employees said they had resorted to pressurizing customers to sign consent forms by falsely claiming their accounts might be closed or subsidies stopped. Some account-opening forms had signatures added later, with backdated creation dates, the report said.
Officials fear they could face trouble from managers if they perform a genuine audit report, or face trouble from RBI if it picks up the customer request forms for scrutiny. Experts in the fields of bank auditing have argued that the bank should have outsourced the audit for an impartial investigation rather than relying on its branch staff for the same