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What is Digital Banking Unit, how will it work and what will be the benefit for you?

Prime Minister Narendra Modi has implemented the announcement made by Finance Minister Nirmala Sitharaman in the Union Budget for 2022-23 on Sunday (October 16) last week. Taking this forward, the PM dedicated 75 digital banking units – DBUs to the nation. PM Modi said, “These DBUs will ease the financial work and will improve the banking work of the people of the country.” The PM has defined these as units providing maximum facilities at least in digital infrastructure.

what was the initial announcement

In the budget for the year 2022-23, Finance Minister Nirmala Sitharaman said, “In recent years, there has been a rapid increase in new things related to digital banking, digital payments and fintech in the country. The benefit of digital banking should reach the consumers in every nook and corner of the country.

The use of technology in financial operations can be called fintech. In other words it is the use of traditional financial services and modern technology in managing the financial aspects in various companies and businesses. Taking this agenda forward and on the completion of 75 years of the country’s independence, it is proposed to create 75 Digital Banking Units (DBUs) of Scheduled Commercial Banks in 75 districts of the country.

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Significantly, scheduled banks are those banks which are listed under Schedule II of the Reserve Bank of India Act, 1934.

What are these DBUs?

In April this year, the Reserve Bank of India (RBI) issued guidelines for DBUs following the report of a working group of the Indian Banks Association (IBA). Digital banking unit means a particular business unit or hub. Where there is minimum digital infrastructure.

One who is capable of providing digital banking products and services as well as working digitally at any time for existing financial products and services. Various services offered by a bank to its customers like mortgage, loan, insurance are called banking products.

DBU will provide digital banking facilities to people such as opening savings accounts, balance-cheques, printing passbooks, fund transfers, investments in fixed deposits, loan applications, checks issued stop-payments, applications for credit and debit cards, tax and Bill payment and enrollment instructions. This will help provide customers with affordable, convenient access to banking products and services and a better digital experience throughout the year.

who will put dbu

Regional Rural Banks, Payment Banks and Local Area Banks are allowed to open DBUs. Apart from these, commercial banks with digital banking experience have been allowed to open DBUs in Tier 1 to Tier 6 centres. There is also no need to take approval from RBI to open these DBUs. Provided that they have not been banned for any particular reason.

DBU is being set up to ensure that digital banking reaches every nook and corner of the country. This includes 11 public sector banks, 12 private sector banks and one small finance bank.

What facilities will these units provide?

According to RBI, every DBU should offer certain minimum digital banking products and services. Such products should be on both the liabilities and assets side of the balance sheet of the digital banking segment. This will also include digitally value-added services for traditional products.

Such services allow clients to hedge foreign exchange risk, transfer funds, pay taxes, and much more. Such services include savings bank accounts covered under various schemes, current accounts, fixed deposit and recurring deposit accounts, digital kits for customers, mobile banking, internet banking, debit cards, credit cards and mass transit system cards, digital for merchants The kit includes UPI QR code, BHIM Aadhaar and Point of Sale (POS).

Other services of DBU also include applying to customers for identified retail MSMEs or planned loans. In this, completely digital processing will be used for such loans. This may also include from online application to distribution and also to identify government sponsored schemes that come under the national portal.

How can you transact in DBU?

Both ICICI Bank and HDFC have announced the formation of DBU. ICICI Bank DBU will have 2 special features. These will include a self-service zone and a digital help zone.

Customers can use ATMs, a Cash Deposit Machine (CDM) and a Multi-Functional Kiosk (MFK) in the Self Service Zone. It provides services like printing of passbooks, depositing checks and accessing internet banking.

It will also provide a digital interactive screen where customers can interact with the chatbot to know about products, offers and important bank notices.

Meanwhile, the Digital Assistance Zone will have branch officers who will help customers to open savings account, current account, fixed deposit and recurring deposit etc.

A completely digital approach will be adopted in providing such services. It can be used in tablet through Aadhaar based eKYC.

HDFC Bank’s DBU will have a Self Service Zone for customer transactions using Interactive ATMs, Cash Deposit Machines, Interactive Digital Walls, Net Banking Kiosks, Video Calls and Tab Banking. Along with this, DBU will also have an auxiliary zone consisting of two bank employees.

How will DBU compete with Fintech?

Presently, the fintech operating as Neobank provides digital banking services in the country. Neo Bank can be taken in simple words as such digital banks which work online.

For this, they use artificial intelligence and machine learning techniques. but this This work is done in partnership with non-banking financial companies (NBFCs).

Some of the Neo banks offering such services in India are Jupiter, Fi Money, Neo, Razorpay X. Neobanks or digital banks are known to offer better digital facilities as compared to traditional banks with online and mobile banking facilities.

Due to the arrangement that Neo Bank currently has with NBFCs or scheduled banks to conduct the actual banking part, some industry considers these digital banks as companies glorifying digital distribution companies. In fact, these companies have created very good and simple ways to reach out to the customer, access customer data and know what kind of loans to give.

Also read:

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