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75 Digital Banking Units to be setup in 75 Districts across country

The Finance Minister while presenting the budget this year announced on setting up of 75 digital banking units in 75 districts in the country. Digital Banking Units will facilitate all the traditional bank work like depositing cheques, pay-in slips, etc digitally.

Background:

Since the demonetization of the national currency in 2016, India is paving its way toward a cashless economy. In recent years, digital banking, digital payments and fintech innovations have grown at a rapid pace in the country. Ergo, to ensure the benefits of digital banking tech reach the masses, the GOI is encouraging these sectors. While trying to make sure that the technology is consumer-friendly, continuous support from the government is visible in every form. Consequently, the government proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks. Not only its a step further towards the ‘Digital India’ but also marks the 75 years of independence.

All about Digital Banking Units (DBU):

A specialised fixed point business unit, DBU is a certain minimum digital infrastructure for delivering digital banking products and services. Along with operating under the retail banking division of the bank, DBU will deliver new digital products and services.

Benefits/Significance of Digital Banking Units:

  • Firstly, DBU will offer a cost-effective, efficient, paperless and secure manner with 24X7 availability in both self-service and assisted mode.
  • Secondly, it will encourage traditional ones to adopt a digital strategy by educating them. Consequently, promoting ‘Digital India’ too.
  • Thirdly, it will open up rural market for service providers besides providing a boost to credit flow.
  • DBU will help to provide personalised finance management tools to new customers.
  • As a result of all this, financial literacy along with digital literacy will get a boost.
  • Better customer experience aided by technology.
  • As compared to the cost of setting up a new branch, DBU is much cheaper.
  • Increase the speed of payments.

Services to be offered by Digital Banking Units:

  • open saving accounts to receive money under government schemes.
  • help customers in Fixed deposits (FDs) and Recurring Deposits (RDs) along with internet banking.
  • provide digital kits for merchants as well as customers.
  • UPI QR Code and Point of Sale (PoS) mechanism.
  • Supply of Debit and credit cards, allowing ATM transactions.
  • Help customers with the application for MSME loans.

Digital Banking Unit will intends to bring financial inclusion in the country. However, the Digital Banks have been around the world since a long now in countries like Hong Kong, Singapore, Malaysia, China, the UK and the US. It will be interesting to witness the growth of DBUs in India as well.

To read about the guidelines provided by RBI with respect to DBU click here

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