Bank of Baroda, one of India’s prominent financial institutions, finds itself embroiled in a major scandal as internal audits and investigative reports reveal a shocking series of fraudulent activities within the bank. These fraudulent activities allowed certain bank agents to steal 2.2 million rupees (approximately $27,000) from the accounts of 362 unsuspecting customers.
The scandal came to light after an exposé by The Reporters’ Collective (TRC). This exposé revealed that the bank’s employees were illicitly linking unauthorized mobile numbers to customer accounts that lacked a registered mobile number. This was done to onboard these customers onto the bank’s new mobile banking app, known as “bob World.” However, the unauthorized mobile numbers belonged to bank staff, managers, security guards, their relatives, and bank agents in remote areas.
The underhanded tactics employed by the bank’s employees, which were aimed at increasing the number of registrations on the bob World app, raised serious concerns about identity theft and posed a significant risk to customers’ funds. In internal emails, the bank itself admitted that this was a “fraud-prone area.”
In response to the exposé, the Reserve Bank of India (RBI) ordered a thorough audit of Bank of Baroda’s operations. The audit was carried out on a national scale, involving the examination of documents from approximately 422,000 accounts suspected of wrongful registration on the bob World app by bank staff. However, it appears that this audit process itself was marred by irregularities.
Many bank employees revealed that the audit was not primarily aimed at identifying and rectifying wrongdoing but rather at covering it up. They claimed that, under instructions from their regional offices, they fabricated documents for the audit.
It’s noteworthy that the bank had tasked its internal auditors with the responsibility of primarily looking for bob World request letters, which indicated that customers had requested the online app service on their mobile phones. Additionally, they were instructed to verify forms that customers had signed to change the mobile numbers associated with their accounts. The presence of these forms was considered proof that the bank staff had not engaged in fraudulent activities. Unfortunately, in most cases, these documents were missing, as revealed by audit reports accessed by TRC.
The audit reports exposed a series of discrepancies and issues, further highlighting the inadequacy of the internal audit process. These reports were filled with remarks about customers’ documents that were unfilled, partially filled, unsigned, undated, or otherwise invalid. In a fair and rigorous audit, these documents would have been rejected.
Furthermore, Bank of Baroda’s own employees stated that they were pressured to create and manipulate documents during the auditing process in an effort to salvage the situation. They revealed instances where they added customer signatures and thumbprints to mobile banking consent forms. Some of these forms were even backdated to give the appearance that all documents were in order.
The scandal has taken a toll on the bank’s employees, who claim that they faced a double burden. Initially, they were pressured to meet targets by registering customers on the bob World app by any means necessary, and then they were expected to produce documents showing that customers had requested the service.
The Bank of Baroda Employees’ Union (Karnataka) raised concerns in a letter sent to the bank’s managing director and CEO, expressing outrage at the internal audit process. They questioned the integrity of the audit, particularly since it was being conducted by the very individuals who may have been involved in fraudulent activities. The union emphasized that they had tried to draw the management’s attention to issues related to mobile banking and other irregularities in the past but had received no response.
The gravity of the allegations and the apparent inadequacies in the audit process have prompted experts to call for an independent and impartial audit. They argue that the bank should have outsourced this investigation to ensure its fairness and accuracy.
The Bank of Baroda scandal has revealed serious gaps in the bank’s practices, leading to concerns about customer data security, fraud prevention, and the ethics of the bank’s operations. The bank now faces increased scrutiny from regulatory authorities, and customers are left with valid concerns about the safety of their funds. It remains to be seen how the bank will address these issues and regain the trust of its customers.
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