Knowledge Corner-Digital Payments- Establishment of Digital Banking Units(DBU) by Scheduled Commercial Banks.!!New way to increase Digital Payments.

As announced by our Hon. Finance Minister Mrs. Nirmala Sitaramanin her budget speech to set up 75 DBUs in 75 districts to commemorate our country's 75 years of independence (Azadi ka Amrit Mahotsav). RBI released Guidelines in this respect recently.

DBUs are specialised fixed point business unit/hubs housing specific minimum digital infrastructure for delivering digital banking products & services as well as servicing existing financial products & services digitally, in both self-service and assisted mode, to enable customers to have cost-effective/ convenient access and enhanced digital experience to/ 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.

1. Opening of DBUs – General Permission:

All scheduled commercial banks (except RRBs, PBs, and LABs) with past digital banking experience are permitted to open DBUs in Tier 1 to Tier 6 centres, unless otherwise specifically restricted, without needing permission from the central bank in each case.

2. Infrastructure and Resources:

Each DBU will be housed distinctly, with separate entry and exit provisions. They will be independent of an existing Banking Outlet with formats and designs most appropriate for digital banking users.

Meanwhile, for the front-end or distribution layer of digital banking, each bank would choose suitable innovative 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 the use of own device for digital banking, Video Call / Conferencing facilities, to set up a DBU.

Each DBU will be headed by a sufficiently senior and experienced bank executive, preferably Scale III or above for PSBs or equivalent grades for other banks, which can be designated as the Chief Operating Officer (COO) of the DBU.

3. Cyber Security:

To ensure the physical security of the infrastructure of the DBU, adequate safeguards for the cyber security of the DBUs will have to be secured by the banks.

4. Products and Services:

Each DBU should offer certain minimum digital banking products and services.

These products should be on both liabilities and assets side of the balance sheet of the digital banking segment.?

?Any product or service that can be provided digitally through internet banking or mobile banking within the BR act 1949 can be provided in the DBU.

5. Digital Banking Customer Education:

In addition to onboarding customers in a wholly digital environment, various tools and methods shall be used by DBUs to offer hands-on customer education on safe digital banking products and practices for inducing customers to self-service digital banking services.

6. Digital Business Facilitator / Business Correspondent:

Banks have the to engage digital business facilitator/business correspondents in conformance with relevant regulations to expand the virtual footprint of DBUs.

7. Customer Grievances:

An adequate digital mechanism should be implemented to offer real-time assistance and redress customer grievances arising from business and services provided by the DBUs directly or through Business Facilitators / Correspondents.

8. Reporting Requirements:

Banks need to furnish information relating to the opening, closure, merger, or shifting of DBUs online through Central Information System for Banking Infrastructure (CISBI) portal to the Department of Statistics and Information Management (DSIM).

The performance update for DBU needs to be furnished in a pre-defined reporting format (being separately issued) to the Department of Supervision, RBI monthly and in a consolidated form in the Annual Report of the bank.

9. Role of Board of Directors:

Expansion of digital financial services and financial inclusion are overarching objectives of DBUs. Given the operational flexibility of banks in this domain, the board should ensure a regular on-site and off-site monitoring system covering all aspects of the guidelines.

The Board or a Committee of the Board shall review the progress and key performance indicators of digital banking services, including DBU, separately at a suitable periodicity.?

10: Minimum Products and Services to be offered by DBUs:

Facilities like savings, current, recurring deposits, fixed deposit opening, and digital kits for customers such as mobile and internet banking, debit card, credit card, mass transit system cards, UPI QR code, BHIM Aadhaar, POS, etc. are offered.

Further, cash withdrawal and cash deposit through ATM and Cash Deposit machines are allowed, which means no physical cash is accepted across counters.?