Finance Ministry Plans To Combat Fraud Amid RBI's BoB App Ban

The Union finance ministry might suggest tougher actions to shield citizens from cyber scams, prompted by an increase in fraud cases including the RBI banning Bank of Baroda World app.

In October 2023, the RBI ceased the Bank of Baroda from enrolling new customers on its mobile app 'BoB World' due to significant supervisory concerns. Responding to this, the bank assured it had taken corrective actions to address the issues.

RBI invoked its authority under Section 35A of the Banking Regulation Act, 1949, directing Bank of Baroda to immediately suspend further customer enrollments on the 'BoB World' app. The central bank stated that future customer enrollments would be permitted once the bank rectifies the identified deficiencies and strengthens related processes to RBI's satisfaction.

What actions might the Finance Ministry take?

The report suggested that the Finance Ministry's strategy includes endorsing stricter Know Your Customer procedures and due diligence by banks and financial institutions when bringing new merchants onboard. This emphasis extends to business correspondents who may face greater susceptibility to security breaches.

Furthermore, the ministry's proposal highlights the necessity for enhanced data security and safety measures among merchants and business correspondents. The report also hinted that the RBI is urging banks to reassess the concentration of business correspondents in regions with a high frequency of cyber security breaches on mobile banking apps.