Reserve Bank of India nod to banks to open digital banking units

The Reserve Bank of India (RBI) on Thursday laid down norms to allow commercial banks to open digital banking units (DBU) while mandating minimum products and services that must be offered in these units. The Union Budget of 2022-23 had announced the setting up of 75 Digital Banking Units (DBUs) in 75 districts to commemorate the 75 years of independence of our country.

To start with, all scheduled commercial banks with past digital banking experience are allowed to open such units except for regional rural banks, local area banks and payments bank, without prior approval of the RBI in tier-1 to tier-6 cities.

DBU has been defined as a specialised fixed point business unit or hub housing certain minimum digital infrastructure for delivering digital banking products and services as well as servicing existing financial products and services digitally, in both self-service and assisted mode.

The aim DBU is to enable customers to have cost effective and convenient access and enhanced digital experience of such products and services in “an efficient, paperless, secured and connected environment with most services being available in self-service mode at any time, all year round.”

The RBI has said each DBU should be housed distinctly, with separate entry and exit provisions. “They will be separate from an existing banking outlet with formats and designs most appropriate for digital banking users,” the RBI notification said.

The banking regulator has mandated minimum products and services that banks must offer in these DBUs. “Each DBU must offer certain minimum digital banking products and services. Such products should be on both liabilities and assets side of the balance sheet of the digital banking segment… The DBUs are expected to migrate to more structured and custom-made products, from standard offerings by use of its hybrid and high quality interactive capabilities,” the RBI said.

Among liability products, savings account, current account opening, fixed and recurring deposit products, mobile and internet banking, debit card, digital kits for merchants and customers, UPI QR code, Point of sale terminal, etc., has been mandated.

Among asset products, onboarding of retail, MSME customers for loans, digital processing of loans, and identified government-sponsored schemes covered under the national portal has been mandated.

The RBI said digital banking products and services will generally mean those with designs 

nearly end-to-end digital life cycle with the initial customer acquisition/product delivery taking place digitally through self-service or assisted self-service.  

“The banks will have the options to engage digital business facilitator/ business correspondents to expand the virtual footprint of DBUs,” the RBI said.

The norms on setting up of DBU are effective immediately.