Prime Minister Narendra Modi on Sunday dedicated to the nation 75 Digital Banking Units, including two of Jammu and Kashmir Bank, via video-conferencing. The prime minister attributed India's sustained economic growth to the efforts of the BJP government to replace pre-2014 'phone banking' with 'digital banking'.
Observing that the country has shifted from the pre-2014 'phone banking' system to digital banking in the last eight years, he said "as a result, India's economy is moving forward with a continuum."
PM Modi said before 2014, the banks used to get phone calls to decide their functioning, and added "phone banking politics had made the banks unsafe and made the country's economy insecure by sowing the seeds of thousands of crores of scams."
Earlier in April, Finance Minister Nirmala Sitharaman had reiterated her Budget announcement of setting up 75 digital banking units in 75 districts of the country this year.
What are digital banking units?
Earlier this month, the RBI announced the guidelines for DBUs, following the report of a working group of the Indian Banks Association. 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.
According to a report by The Indian Express, Commercial banks (except regional rural banks, payment banks and local area banks) having past digital banking experience are allowed to open DBUs in Tier 1 and Tier 6 centres, unless otherwise specifically restricted, without having the need to take permission from the RBI in each case.
What services will they provide?
The RBI has mandated that each DBU will have to 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. Digitally value-added services to conventional products would also qualify as such, according to The Indian Express.
The services to be provided by DBUs 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, and mass transit system cards, digital kit for merchants, UPI QR code, BHIM Aadhaar and point of sale (PoS).
