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Post at: Jun 03 2022

Digital Banking Units(DBUs)

Why in news ?

  • The Reserve Bank of India on April 7 released guidelines for banks to set up Digital Banking Units (DBUs). 
  • This follows an announcement made in Union Budget 2022-23 on the setting up of 75 DBUs.
  • These will be established in 75 districts to commemorate 75 years of independence.

What is a DBU?

  • A digital banking unit is a specialised fixed point business unit or hub housing certain minimum digital infrastructure.
  • It will deliver digital banking products and services as well as servicing existing financial products and services digitally in self-service mode at any time.

Who will set up these DBUs?

  • Commercial banks (other than regional rural banks, payment banks and local area banks) with past digital banking experience are permitted to open DBUs in tier 1 to tier 6 centres.

Services provided by these units

  • As per the RBI, each DBU must offer certain minimum digital banking products and services.
  • Such products should be on both liabilities and assets side of the balance sheet of the digital banking segment
  • 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).

Pros of DBUs

  • Bankers say digital banking units can enable last-mile financial inclusion as a lender can reach a wider customer base in a more cost-effective manner.

Limitation of   DBUs

  • The limitations of DBU include low public awareness and internet penetration in lower-tier cities.
  • Further, challenges such as cyber security, data privacy and phishing need to be resolved if DBUs are to reach their full potential.
     

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