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Current Affairs

Digital Banking Unit

Date: 22 April 2022 Tags: Miscellaneous

Issue

The government is planning to implement the plan of setting up 75 digital banking units in 75 districts of the country this year. 

 

Background

The government is making efforts to ensure benefits of digital banking reach every nook and corner of the country.

 

Details

 A digital banking unit is a specialised fixed point business unit or hub which houses certain minimum digital infrastructure for providing digital banking products and services.

Setting up DBU

  • Commercial banks having digital banking experience are permitted to open DBUs in tier 1 to tier 6 centres, without having the need to take permission from the RBI in each case.

  • Regional rural banks, payment banks and local area banks will have restrictions for setting up DBUs.

 

Services provided

  • They are required to provide certain minimum digital banking products and services on both liabilities and assets side of the balance sheet of the digital banking segment.

  • They are:

  • Savings bank accounts

  • Current accounts

  • Fixed deposits

  • Mobile banking

  • Internet banking

  • Payment cards

  • UPI QR code

  • BHIM Aadhaar 

  • Point of sale (PoS)

  • Other services include onboarding customers for schematic loans, starting from end-to-end digital processing of such loans.

 

Fin-techs

  • Fin-techs/digital banks are involved in offering digital banking services but they do so in partnership with non-banking financial companies (NBFCs).

  • Compared to traditional banks, digital banks excel at product innovation and offer far better digital solutions.