“Bank of Baroda will be allowed to onboard customers to its Bob World app only after rectifying certain deficiencies,” the RBI said on October 10, without giving any details about the issues.
| Photo Credit: Reuters
Shares of Bank of Baroda fell nearly 4% on October 11, a day after the Reserve Bank of India (RBI) stopped the State-run lender from adding customers to its mobile app citing “certain material supervisory concerns.”
Shares of the bank were last down 3.4% at 10.59 a.m. It was also the top drag in the Nifty public sector bank index, which was down 0.2%.
“Bank of Baroda will be allowed to onboard customers to its Bob World app only after rectifying certain deficiencies,” the RBI said on October 10, without giving any details about the issues.
“Expect the restriction on digital sourcing to hamper both asset and liability growth in the near term,” Macquarie analysts led by Suresh Ganapathy said in a note.
“In the first quarter, about 98% of savings and nearly 91% of the bank’s current accounts, along with a significant portion of retail loans, personal loans, home loans, auto loans and credit cards were sourced digitally,” Macquarie said.
Bob World app has 8.1 million daily transactions, while 43% of time deposits are obtained through the app, the bank had said in its quarterly presentation in August.
“(Going by previous instances) It may take more than a year for the RBI to give approval. So, in the interim, some business growth will get affected,” Macquarie added.
The RBI had previously placed restrictions on the country’s top private lender HDFC Bank’s digital operations for more than a year, before lifting curbs in March 2022.
Shares of Bank of Baroda have underperformed the PSU bank index for the year so far, rising 12% compared to nearly 20% in the index.
