Digital Bank Units

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Context

• Recently, India launched 75 Digital Banking Units in villages and small towns across the country.

Background

• Availing banking services has traditionally been a struggle for people living in villages and small towns.
• Even as more than a billion bank accounts exist in India, people living in remote areas have had to typically take a day off from the work to visit a nearby city for their banking related work.
• The Digital Bank Units are being set up to ensure that the benefits of digital banking reach every nook and corner of the country and cover all states and union territories.

What are Digital Bank Units?

• Digital Bank Units are brick-and-mortar outlets or specialised fixed point business units, that are equipped with tablets and internet services. This is to help individuals and small businesses open their savings accounts, access government identified schemes, perform verifications, make transactions and avail loans and insurance.

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. Unless specifically restricted, they don’t need to take permission from the RBI in each case.

How many banks participating in DBUs?

• As many as 11 public sector banks, 12 private banks and one small finance bank are participating in the endeavour.

What services will be provided by these units?

• The RBI has mandated that each DBU will have to 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. Digitally value-added services to conventional products would also qualify as such.
• DBU outlets will provide a variety of digital banking facilities to people such as opening of savings account, balance-check, print passbook, transfer of funds, investment in fixed deposits, loan applications, stop-payment instructions for cheques issued, apply for credit / debit cards, view statement of account, pay taxes, pay bills, make nominations, among others.
• The services include digital kit for customers, mobile banking, Internet banking, digital kit for merchants, UPI QR code, BHIM Aadhaar and point of sale (PoS).
• Other services include making applications for and onboarding 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.
• DBUs will spread Digital Financial Literacy and special emphasis will be given to customer education on cyber security awareness and safeguards.
• Also, there shall be digital mechanisms to offer real-time assistance and redress customer grievances arising from business and services offered by the DBUs directly or through business facilitators and correspondents.

Transactions one can do at a DBU- Recent announcements

• Both ICICI Bank and HDFC have announced to set up DBUs.
• For example: ICICI bank DBU's will have 2 distinct features – a Self-service Zone and a Digital Assistance Zone.

Self-service Zone

• At the Self-service Zone, the customers can access ATM, a Cash Deposit Machine (CDM) and a Multi-Functional Kiosk (MFK) that offers services like printing of passbook, depositing cheque and accessing internet banking.
• It will also provide a digital interactive screen where customers can interact with a chatbot to know about products, offers and mandatory notices.

Digital Assistance Zone

• The Digital Assistance Zone will have branch officials to assist customers to undertake the services including opening of savings account, current account, fixed deposit and recurring deposit etc.
• The above services will be offered in a completely digital manner through a tablet device, using Aadhaar-based eKYC.

Significance

• The Digital Banking Units are part of Government’s efforts to serve people in the far-flung areas of the country.
• DBUs will enable customers to have cost effective, convenient access and enhanced digital experience of banking products and services all-round the year.
• DBUs will also help bring financial services and literacy to more citizens.

https://indianexpress.com/article/explained/explained-economics/explained-digital-banking-units-prime-minister-narendra-modi-8211607/