Digital Banking Units

What are Digital Banking Units (DBUs)?

A Digital Banking Units is a specialised fixed point business unit or hub, housing a certain minimum digital infrastructure for delivering digital banking products and services.

They will also service existing financial products and services digitally in self-service mode at any time.

Who will set up these Digital Banking Units in India? Commercial banks (other than regional rural banks, payment banks and local area banks) with past digital banking experience are permitted to open Digital Banking Units DBUs in tier 1 to tier 6 centres, unless otherwise specifically restricted, without having the need to take permission from the RBI in each case.

Digital Banking Units in India Background

Budget announcement: In the Union Budget for 2022-23, to mark 75 years of our independence, the government proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of India by Scheduled Commercial Banks.

RBI guidelines: In April 2022, the Reserve Bank of India (RBI) announced the guidelines for DBUs.

Digital Banking Units DBUs Products and Services

Liability Products and services: Account opening services and providing digital kits for customers and merchants which includes internet banking, debit card, UPI QR code, POS etc.

Asset Products and services: Making applications for and onboarding of customer for identified retail, MSME or schematic loans and Identified Government sponsored schemes which are covered under the National Portal.

Digital Services: Cash withdrawals, transfer of funds, updation of KYC / other personal details, lodging of online grievances, digital onboarding of customers for schemes such as Atal Pension Yojana (APY); Insurance onboarding for Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY).

Digital Banking Units RBI Guidelines

Digital banking customer education: DBUs will offer hands-on customer education on safe digital banking products and practices for inducting customers to self-service digital banking services.

Head of the Digital Banking Units: 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).

Cyber Security: In addition to ensuring physical security of the infrastructure of the Digital Banking Units, adequate safeguards for cyber security of the DBUs will have to be ensured by the banks.

Reporting Requirements: Performance update with respect to DBU shall be furnished in a RBI pre-defined reporting format. Banks shall furnish information relating to opening, closure, and merger or shifting of DBUs to RBI.

Digital Business Facilitator / Business Correspondent: Banks to have to engage digital business facilitator / business correspondents to expand the virtual footprint of DBUs.

Customer Grievances: There should be adequate digital mechanism to offer real time assistance and redress customer grievances arising from business and services offered by the Digital Banking Units DBUs directly or through Business Facilitators / Correspondents.