Digital Banking Units: what services will they provide?

Nirmala Sitharaman reiterated her Budget announcement of setting up 75 digital banks in 75 districts this year. Earlier this month, the Reserve Bank of India released guidelines for DBUs after reviewing a report by the Indian Banks Association.

The digital banking unit is a fixed point business unit or hub that provides digital banking products and services as well as servicing existing financial products and services in a self-service mode digitally whenever it is convenient.

Banks (other than regional rural banks, payment banks, and local area banks) with prior digital banking experience are allowed to set up DBUs in tier 1 to tier 6 centres, unless otherwise specifically restricted, without having to take permission from the RBI in each case.

The RBI requires each DBU to offer certain minimum digital banking products and services. In the digital banking segment, such products should appear on both the liabilities and assets side of the balance sheet.

The services include savings bank accounts under various schemes, current accounts, fixed deposits and recurring deposit accounts, digital kit for customers, mobile banking, Internet banking, debit cards, credit cards, and mass transit system cards, digital kit for merchants, UPI QR code, BHIM Aadhaar and point of sale (PoS).

Other services include making applications for and onboarding of customers for identified retail, MSME or schematic loans.  This may also include end-to-end digital processing of such loans, starting from online application to disbursal and identified government sponsored schemes that are covered under the national portal.

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