Scheduled commercial banks can now establish separate Digital Banking Units (DBU): RBI

The Reserve Bank of India today (April 7, 2022) released the guidelines on the “Establishment of Digital Banking Units (DBUs)”. These guidelines are applicable to all Domestic Scheduled Commercial Banks (excluding Regional Rural Banks, Payments Banks, and Local Area Banks).

As per the guidelines, scheduled commercial 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 Reserve Bank of India in each case, unless otherwise specifically restricted. Each DBU shall 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 services provided by DBUs are designed nearly end-to-end digital life cycle with the initial customer acquisition/product delivery necessarily taking place digitally through self-service or assisted self-service.

Digital Services provided by DBU are (i) Cash withdrawal and Cash Deposit only through ATM and Cash Deposit Machines respectively- no physical cash acceptance/disbursal across counters; (ii) Passbook printing / Statement Generation; (iii) Internet Banking Kiosk which may also include facilities to provide all/majority of services available on internet banking including indent and issuance/processing of Cheque Book request, receipt and online processing of various standing instructions of clients;(iv) transfer of funds (NEFT/IMPS support); (v) updation of KYC / other personal details, etc.; (iv) Lodging of grievance digitally and acknowledgment thereof and also tracking of resolution status; (v) Account Opening Kiosk; (vi) Kiosk with e-KYC/ Video KYC; (vii) Digital onboarding of customers for schemes such as Atal Pension Yojana (APY); Insurance onboarding for Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY).

The Liability Products and services provided by DBU are  (i) Account Opening: Saving Bank account under various schemes, Current account, Fixed deposit, and Recurring deposit account; (ii) Digital Kit for customers: Mobile Banking, Internet Banking, Debit Card, Credit card and mass transit system cards; (iii) Digital Kit for Merchants: UPI QR code, BHIM Aadhaar, POS, etc.

The Asset Products and services are: (i) Making applications for and onboarding of customers for identified retail, MSME, or schematic loans. This may also include end-to-end digital processing of such loans, starting from online application to disbursal; (ii) Identified Government-sponsored schemes that are covered under the National Portal.

The operational governance and administrative structure of the DBUs will be aligned with that of the Digital Banking Segment of the bank. However, in order to accelerate digital banking initiatives, each DBU will be headed by a sufficiently senior and experienced executive of the bank, preferably Scale III or above for PSBs or equivalent grades for other banks who can be designated as the Chief Operating Officer (COO) of the DBU.

Each bank establishing DBU requires to inject suitable smart equipment, such as Interactive Teller Machines, Interactive Bankers, Service Terminals, Teller and Cash Recyclers, Interactive Digital Walls, Document uploading, self-service card issuance devices, Video KYC Apparatus, secured and connected environment for use of own device for digital banking, Video Call / Conferencing facilities, to set up a DBU. These facilities can be insourced or outsourced while complying with relevant regulatory guidelines. The back-end including the Core Banking System and other back office-related information systems for the digital banking products and services can be shared with that of the incumbent systems with logical separation. Alternatively, banks can adopt more core-independent digital-native technologies offering better scalability, flexibility in creating new/reusable digital environments through continuous development/software deployment, and interconnectivity specifically for this business segment, based on their digital strategy.

In the Union Budget 2022-23 Finance Minister Nirmala Sitharaman had announced for setting up of 75 Digital Banking Units (DBUs) in 75 districts to commemorate the 75 years of independence of our country (Azadi ka Amrit Mahotsav). In this regard, the committee formed by RBI to outline a roadmap for the establishment of DBUs deliberations gave its recommendations on different aspects of DBU viz., the digital banking unit model, facilities to be offered in DBUs, monitoring of functioning of DBUs, cyber security, and other IT-related aspects, the role of DBU in the spread of digital banking awareness, etc.  The guideline is being finalized and released by the Central Bank based on the recommendations of the Committee, which will come into effect from today (the date of issue of the RBI Circular).