Published on: April 12, 2022
DIGITAL BANKING UNITS
The Reserve Bank of India (RBI) has recently released guidelines for the banks of the country to set up digital banking units (DBUs)
Saint-Germain-en-Laye DIGITAL BANKING UNITS
- Specialised fixed point business unit / hub housing certain minimum digital infrastructure for delivering digital banking products & services
- Introduced with a prime objective of expansion of digital financial services and financial inclusion
- Each DBU must be headed by a senior and experienced executive of the bank who can be designated as the DBU’s Chief Operating Officer (COO).
GUIDELINES FOR DBUS
- Permission to open DBUs has been given to scheduled commercial banks (SCB) that have past digital banking experience
- They can open DBUs in Tier 1 to Tier 6 centres without taking any permission from the Reserve Bank of India (RBI)
- The DBUs that will be opened by the SCBs will be treated as Banking Outlets
- Each DBU has to be housed distinctly, with separate provisions for exit and entry.
- The guidelines state that the DBUs must be separate from the existing Banking Outlet with proper formats provided that will be appropriate for digital banking users.
- The SCBs will also be free to adopt an out-sourced or in-sourced model for the DBU operations.
- The outsourced model must comply with the regulatory guidelines related to outsourcing.
- The establishment of the DBUs must be a part of the SCB’s digital banking strategy.
- The administrative and operational structure of the DBUs must be in line with the Digital Banking Segment of the SCBs.
- The physical security of the DBU infrastructure, as well as cyber security of the DBUs musty, be ensured by the banks.
- The banks can employ business correspondents to expand the DBU’s virtual footprint.
- There should be proper mechanisms to redress the grievances of the customer arising from the services provided by the DBUs.