Finance Ministry's Strategy After RBI Bans Bank Of Baroda World App

The Union finance ministry is reportedly considering implementing stricter measures to safeguard citizens from cyber fraud, according to sources cited by a media house. This move follows a surge in fraud cases, including the Bank of Baroda World app scam, highlighted during a recent inter-ministerial meeting focused on enhancing cybersecurity and combating financial fraud.

In October 2023, the Reserve Bank of India (RBI) halted Bank of Baroda from enrolling new customers on its 'BoB World' mobile app due to significant supervisory concerns. The RBI invoked its authority under Section 35A of the Banking Regulation Act, 1949, directing the bank to suspend customer onboarding until deficiencies were rectified to the regulator's satisfaction.

The proposed measures from the finance ministry are said to include stricter Know Your Customer (KYC) procedures and enhanced due diligence for banks and financial institutions when onboarding new merchants, particularly Business Correspondents (BCs) vulnerable to security breaches. Additionally, emphasis is placed on improving data security and protection practices at the merchant and BC level. It's reported that the RBI may urge banks to reassess the concentration of BCs in regions with a high incidence of cyber fraud.