The Prime Minister of India recently dedicated 75 Digital Banking Units (DBUs) across various districts to the nation. These DBUs, part of the Union budget speech for 2022-23, were announced as a commemorative effort for the country’s 75 years of independence. They aim to ensure the benefits of digital banking reach every corner of the nation, across all states and Union territories.
Understanding Digital Banking Units
A Digital Banking Unit is a specialized hub set up by scheduled commercial banks. It houses a minimal digital infrastructure necessary for delivering digital banking products and services. The services are available in self-service mode around the clock. These DBUs will primarily help those lacking Information and Communications Technology (ICT) infrastructure to access banking services digitally while also assisting those who are not tech-savvy in adopting digital banking.
Plethora of Services Offered by DBUs
DBUs offer numerous banking facilities. These include opening savings accounts, checking balance, printing passbooks, transferring funds, applying for loans, instructing stop-payment on issued cheques, applying for credit/debit cards, paying taxes, and making nominations, among others. Apart from providing access to government’s credit link schemes through the Jan Samarth portal, they also facilitate end-to-end digital processing of small ticket MSME/retail loans.
Comparison: DBUs & Traditional Banks
Unlike traditional banks, DBUs provide round-the-clock banking services, including cash deposit and withdrawal. Their services are delivered digitally, aiding those without connectivity or computing devices to transact in a paperless mode. Assistance from bank staff is available to guide users through banking transactions. DBUs play a crucial role in providing digital financial literacy and encouraging the adoption of digital banking.
Distinguishing Digital Banks and DBUs
While DBUs lack legal personality and aren’t licensed under the Banking Regulation Act, 1949, Digital Banks possess a balance sheet and legal personality, and are proposed to be licensed banks under the same Act. Furthermore, DBUs improve existing channel architecture by offering regulatory recognition to digital channels but remain silent on competition. Unlike DBUs, which can only be established by existing commercial banks, Digital Banks provide a more competitive and innovative licensing and regulatory framework.
Other Financial Inclusion Initiatives
Several other initiatives have been introduced for financial inclusion in the country. These include Pradhan Mantri Jan Dhan Accounts, Unified Payments Interface (UPI), Direct Bank Transfer, Fintech, and India Stack. The Pradhan Mantri Jan Dhan Yojana (PMJDY) is particularly deemed necessary for incorporating unbanked individuals into the institutional finance fold, thus promoting financial inclusion among the poorer sections of Indian society.
