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Digital Banking Units (DBU)

2022 APR 23

Preliminary   > Economic Development   >   Indian Economy and Issues   >   Banking sector

Why in news?

  • The Finance Minister has reiterated her Budget announcement on setting up 75 digital banking units in 75 districts of the country this year.

About Digital Banking Units (DBU):

  • A digital banking unit is 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 self-service mode at any time.

Who can set up?

  • Commercial banks (other than regional rural banks, payment banks and local area banks) with past 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.

Services offered:

  • As per the RBI, 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 services include:
    • Savings bank accounts under various schemes, current accounts, fixed deposits and recurring deposit accounts, digital kit for customers, mobile banking, Internet banking, debit cards, credit cards UPI QR code and point of sale (PoS).
  • Other services include making applications for and onboarding of customers for identified retail, MSME or schematic loans.

PRACTICE QUESTION:

Consider the following statements regarding Digital Banking Units (DBU)

1. It is a specialised fixed point business unit housing certain minimum digital infrastructure for delivering digital banking products and services.

2. Regional Rural Banks are permitted to open Digital Banking Units

Which of the statements given above is/are correct?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer