RBI Bars Bank Of Baroda From Onboarding New Customers On Its Mobile App

The RBI further said the bank has been directed to ensure that existing 'bob World' customers do not face any disruption on account of this suspension

The RBI also said the strict supervisory norms under the Prompt Corrective Action Framework will apply to government-owned non-banking financial companies from October 2024.

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The Reserve Bank of India (RBI) on Tuesday barred state-owned Bank of Baroda from onboarding fresh customers on its mobile application 'bob World' with immediate effect, citing material supervisory concerns. "The Reserve Bank of India has, in exercise of its power, under Section 35A of the Banking Regulation Act, 1949, directed Bank of Baroda to suspend, with immediate effect, any further onboarding of their customers onto the 'bob World' mobile application," it said in a statement.

The action, the RBI added, is based on certain material supervisory concerns observed in the manner of onboarding customers onto the 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," it added.

The RBI further said the bank has been directed to ensure that existing 'bob World' customers do not face any disruption on account of this suspension. 

On Tuesday, the RBI also said the strict supervisory norms under the Prompt Corrective Action (PCA) Framework will apply to government-owned non-banking financial companies from October 2024. Being put under the PCA framework means restrictions on dividend distribution/ remittance of profits; promoters/ shareholders to infuse equity and reduction in leverage; and restrictions on the issue of guarantees or taking on other contingent liabilities on behalf of group companies. The central bank introduced the PCA Framework for NBFCs on December 14, 2021.

"The Framework has since been reviewed and it has been decided to extend the same to Government NBFCs (except those in Base Layer) with effect from October 1, 2024, based on the audited financials of the NBFC as on March 31, 2024, or thereafter," the central bank said in a circular.

Some of the major government non-banking financial companies (NBFCs) include PFC, REC, IRFC and IFCI. The objective of the PCA framework is to enable supervisory intervention at the appropriate time and requires the supervised entities to initiate and implement remedial measures in a timely manner so as to restore their financial health.