Lately, RBI has issued guidelines related to establishment of Digital Banking Units (DBUs). These guidelines came in the backdrop of the budget speech for 2022-2023, which announced setting up of 75 DBUs in 75 districts to mark the completion of 75 years of the country’s independence.
What is a Digital Bank Unit?
According to the RBI, a DBU is a specialized fixed point business unit or hub that houses certain minimal digital infrastructure for offering digital banking products and services as well as servicing existing financial products and services digitally in self-service mode at any time and all year.
Guidelines related to DBUs:
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- Unless otherwise specified, commercial banks (other than RRBs, payment banks, and LABs) with prior digital banking expertise are permitted to open DBUs in tier 1 to tier 6 centres without the need to seek permission from the RBI in each case, according to the central bank.
- As per the guidelines, each DBU must provide a set of digital banking goods and services. Such products should appear on both the liabilities and assets sides of the digital banking segment’s balance sheet. Digitally enhanced services for traditional products would also be considered.
- DBUs are projected to transition from conventional offerings to more structured and custom-made goods as a result of its hybrid and high-quality interactive capabilities, according to the company.
- They are permitted to maintain 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 services.
- Making applications for and onboarding consumers for designated retail, MSME, or technical loans are among the other services offered. This could encompass end-to-end digital processing of such loans, from application to disbursement, as well as designated government-sponsored programmes covered by the national site.
- Cash withdrawal and deposit are only available through ATMs and cash deposit machines, respectively, with no physical cash acceptance or disbursement across counters.
- Some other digital services include passbook printing, statement generation, fund transfer (NEFT/IMPS support), and KYC and other personal information updates.
Benefits of DBUs:
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- With a ‘light’ banking approach, commercial banks will benefit from digit banking units, which will enable them shrink their physical footprint with fewer brick and mortar locations.
- According to industry participants and stakeholders, the measure will increase loan flow while also opening up the rural market for service providers.
- These units will also be less expensive to set up than a new branch, and they will be able to give a better client experience with the help of technology.
- The units can also be branded as new-age banks that can assist new consumers with tailored finance management solutions.
- Digital banking units also require fewer employees and require less maintenance because to technology tools, making them high-yield units for the parent bank.
- If nothing else, more of these units can promote financial awareness and a positive attitude toward digital banking, which is urgently needed.