Published on: October 18, 2022

Digital banks

Digital banks

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celestially Prime Minister Narendra Modi dedicated 75 digital banking units (DBU) across 75 districts to the nation via video conferencing.

Highlights

  • DBUs are brick-and-mortar outlets that would enable customers to have a cost-effective and enhanced digital experience of banking services with convenient access. With its instalment, people would not have to travel distances to avail banking services, reducing the complications many face within the sector.
  • The DBUs are being set up to ensure that the benefits of digital banking reach every nook and corner of the country. Eleven banks in the public sector, 12 in the private sector and one Small Finance Bank are participating in the endeavour.

What are Digital Banking Units or DBUs?

  • Digital Banking Units (DBUs), in layman’s terms, are specialised branches for delivering digital banking products and services.
  • DBUs will be paperless, and they will also act as digital financial literacy centres.
  • They are specialised fixed-point business units/hubs housing minimum digital infrastructurefor delivering digital banking products and services. This will be delivered in both self-service and assisted modes.

Why are DBUs being introduced?

  • The main objective is to improve the availability of digital infrastructure for banking services. This will also help accelerate and widen the reach of digital banking
  • DBUs would be for digital banking like PCOs (in late nineties) were for long-distance calling or Internet cafes for browsing. This setting up of DBUs is another important step in the country’s banking industry journey, from being physical to phygital to digital-first to digital
  • In fact, NITI Aayog has pitched for “digital only” banks to be set up in the country.

How does having DBUs help customers?

  • This will give customers cost-effective/convenient access and enhanced digital experience of products and services in an efficient, paperless, secured, and connected environment, with most services being available all year round.

How many DBUs are going to function in India?

  • To begin with, 75 DBUs in 75 districts have taken off . These are part of the pilot programme and would be expanded based on the experience.
  • As of now, each of the 29 States and eight Union Territories has got at least one DBU. Karnataka, Odisha, Rajasthan, Tamil Nadu and Uttar Pradesh have got four each, the maximum number of DBUs in a State.

What  services and products can banks offer in a DBU?

  • Each DBU must offer certain minimum digital banking products and self-service fulfilment services.
  • Banks have the freedom to offer any other product or service in addition to the minimum bouquet to cater to the specific needs of the service area. Any product or service that can be provided digitally through internet banking or mobile banking can be provided in the DBU.

Which are the services that can be availed in the DBU?

  • Both liability side products and services and asset products and services have to be provided at a DBU.
  • On the liability side:

(i) Account opening: Saving bank account under various schemes, current account, fixed deposit, and recurring deposit account

(ii) Digital kit for customers: Mobile banking, internet banking, debit card, credit card, and mass transit system cards

(iii) Digital kit for merchants: UPI QR code, BHIM Aadhaar, POS, etc.

  • On the asset products and services side :

(i) Making applications for and on boarding customers for identified retail, MSME, or schematic loans. This may also include end-to-end digital processing of such loans, from online application to disbursal

(ii) Identified Government sponsored schemes covered under the National Portal.

  • As for Digital Services :

(i) Cash withdrawal and cash deposit only through ATM and cash deposit machines, respectively- no physical cash acceptance/disbursal across counters

(ii) Passbook printing/statement generation

(iii) Internet banking including indent and issuance/processing of cheque book request, receipt, and online processing of various standing instructions of clients

(iv) Transfer of funds (NEFT/IMPS support)

Digital on boarding of customers for schemes, such as Atal Pension Yojana , Insurance on boarding for Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana.

Who can set up DBUs in India?

  • All domestic scheduled commercial banks other than regional rural banks, payments banks, and local area banks can set up DBUs. In the first round of 75 DBUs, as many as 11 public sector banks, 12 private sector banks, and one small finance bank participated in the programme.