Why in News?

• Recently, the Prime minister of India launched digital banking unit across 75 districts of the nation.
• These digital banking units can further enhance financial inclusion in the country.
• In the budget 2022-23, it was announced to set up 75 digital banking units in 75 districts of the country.

What is a digital banking unit?

• A digital banking unit is a specialized fixed point of business or hub which has a certain minimum infrastructure for providing digital banking products and services as well as existing financial services products in self-service mode at any point in time.

Service Provided by DBU

• In DBU, the products and services will be offered to customers in 2 modes:

• Self Service Mode
• Digital Assistance Mode

• Services being offered through DBU include banking facilities like the opening of savings accounts, balance checks, print passbook, transfer of funds, investment in fixed deposits, loan applications, stop-payment instructions for cheques issued, application for credit/debit view statement of account, pay taxes, pay bills, make nominations, etc.
• The DBUs will also facilitate onboarding to Government credit link schemes through the Jan Samarth portal and end-to-end digital processing of small-ticket MSME/retail loans.

DBUs will be different from a traditional branch in the following aspects

• They will provide banking services including cash deposit & withdrawal 24 x 7.
• Services shall be provided digitally.
• People not having connectivity or computing devices can do banking transactions from DBU in a paperless mode.
• Bank staff will be available to help and guide users for banking transactions in assisted mode.

RBI guideline Digital Banking Unit

• Commercial banks (other than regional rural banks, payment banks and local area banks) with digital banking experience are permitted to open DBUs in tier 1 to tier 6 centres, unless otherwise specifically restricted.
• DBUs of the banks will be treated as banking outlets.
• DBU must be headed by a senior and experienced executive of the ban who can be designated as the DBU's Chief Operating Officer (COO).

Benefits of the Digital Banking Unit

• DBUs will enable customers to have cost-effective, convenient access and enhanced digital experience of banking products and services throughout the year.
• They will spread Digital Financial Literacy and special emphasis will be given to customer education on cyber security awareness and safeguards.
• It can offer real-time assistance and redress customer grievances arising from business and services provided by the DBUs directly or through Business Facilitators/ Correspondents.

Conclusion

• The digital economy is growing rapidly. All parts of the economy, including commerce, financing, and logistics, need next-generation solutions. Only 27% of our population is digitally literate, with a lack of good connectivity infrastructure. Thus it is the need of the hour for government to focus on digital literacy related to finance.