Bank of Baroda (BoB) has started investigating the role of business correspondents (BCs) in ‘BoB World’ mobile app fiasco. The focus of the investigation will be on how BCs were able to get personal data of customers, which was purportedly misused by adding them to the app without seeking permission.
Sources told FE that the bank is investigating the possibility of its managers colluding with BCs to achieve their targets.
“BCs are used by bank officials to meet their ambitious targets. Some managers used their friendly relations with BCs to expand business. Others also use their influential position to force them to onboard new customers to the mobile app,” a source told FE.
He added that BCs are under pressure to deliver because a negative report by a branch manager is enough to terminate their contract.
The Reserve Bank of India (RBI) on October 10 barred BoB from onboarding new customers on its flagship ‘BoB World’ mobile application.
Typically, BCs do not have access to personal data of bank customers. So, those date must have been shared by bank employees, sources said.
After the RBI ban, BoB has suspended several employees and BCs as the lender found out that some employees fraudulently linked mobile numbers with accounts of customers without their consent to increase the user base of the app.
“It was a win-win situation for bank employees and banking correspondents because it helped employees to meet their monthly targets while banking correspondents got higher commissions for increased transactions,” another source told FE.
BCs also work as representatives of banks and provide financial services to customers in semi-urban and rural areas.
The involvement of BCs and their interaction with branch-level officers have increased over the time, making them a crucial player in the government’s drive of financial inclusion.
They were initially given the responsibility to provide basic banking services such as deposit and withdrawal of money. However, their role has expanded and they are providing a range of financial services such as agents for recovery of principal or interest, opening of Jan Dhan accounts, and sale of insurance and pension plans.
BCs try their best to increase their transactions because their commissions are directly linked to the number of transactions they are able to generate.