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Guidelines for Digital Banking Units (DBUs)

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Guidelines for Digital Banking Units (DBUs)

Recently Reserve Bank of India (RBI) has issued guidelines for setting up of Digital Banking Units (DBUS).

Digital Banking Units aims to enhance the spread of digital modes of banking in India.

Salient features of RBI guidelines:

All Domestic Scheduled Commercial Banks (SCBs) having prior work experience in the field of digital banking is permitted to open DBUs. However, Regional Rural Banks, Payment Banks and Local Area Banks have not been allowed for this.

Banking services available in the Digital Banking Units-

  • Account opening, cash withdrawal and deposit, KYC updation, loan and complaint filing.
  • Each DBU will be treated as a banking outlet. SCBs will have to arrange separate premises (branch centre) for each DBU. They have to keep the entry and exit points for customers in the DBU premises separate from the parent bank branch.
  • Adequate security measures will be ensured by the banks for cyber security of DBUs.
  • For this, a digital system will have to be created, which helps the customers in real time. This will enable redressal of customer complaints related to the functioning, business and services of DBUs on a real time basis.

Importance of Digital Banking Units:

  • These will prove to be helpful for farmers and senior citizens in rural areas. At the same time, these will also promote interoperability and financial inclusion.
  • This will boost the digital economy.
  • Since these will reduce the number of bank branches functioning in the building/buildings, they will also help in reducing the physical footprint.
  • It is cheaper to set up DBUs than to open a new branch of banks. Fewer employees are needed for their work, business and operation. Also, due to the technical equipment, their maintenance cost is also less. This can result in higher profit per unit to their parent bank.
  • DBUs are similar to a specialized fixed point business unit/hub. Minimum infrastructure is required for their installation. These ensure convenient and cost-effective banking for the customers. In addition, they also distribute digital banking products and services.
  • In the Union Budget 2022-23, the government had announced setting up of 75 digital banking units in 75 districts.

Source – The Hindu

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