Bank of Baroda, one of the largest state-run banks in India, has suspended dozens of executives and is clawing back their benefits as it probes irregularities related to the on boarding of customers to its mobile app, according to people familiar with the matter.
(Bloomberg) — Bank of Baroda, one of the largest state-run banks in India, has suspended dozens of executives and is clawing back their benefits as it probes irregularities related to the on boarding of customers to its mobile app, according to people familiar with the matter.
In a pursuit to meet steep targets for signing up customers to the bank’s mobile app, BoB World, Bank of Baroda executives across at least 10 cities linked existing bank accounts without cell phone numbers to unrelated numbers to show new customers were added on, the people said, asking not to be named as the information is private. Bank executives pocketed benefits and rewards for meeting or beating their targets, these people said.
The irregularities at Bank of Baroda highlight the challenges for Indian banks trying to drive growth in a highly competitive market. Lenders in the South Asian nation have been digitizing their operations to enhance customer engagement even as they chase retail accounts to ride the increased demand for credit, attract more deposits and increase cross-selling opportunities to their customers.
Earlier this month, the nation’s banking regulator directed the Mumbai-based lender to suspend on boarding customers to its mobile app immediately. The action was based on “certain material supervisory concerns observed in the manner of on boarding,” the Reserve Bank of India said in an Oct. 10 statement.
In the past few days, the bank has suspended nearly 30 executives, which include branch and regional executives in at least 10 zones, the people said. The number of suspensions will likely rise, they said. Senior executives, who set unrealistic on boarding targets for these teams, will also likely face suspension or even a termination of their employment, they said.
The Bank has also begun recovering the benefits and rewards, which include team dinner reimbursements, for branches that achieved more than 100% of their targets, according to an Oct. 11 internal memo seen by Bloomberg News.
Spokespersons for the Reserve Bank of India and Bank of Baroda didn’t respond to emails seeking comment.
Bob World had over 30 million activated users, according to its latest annual report. The bank incrementally added 10 million new customers to Bob World each year for the last two years, “amongst the highest additions in the Indian Banking space,” according to the report.
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