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Prime Minister Narendra Modi will launch 75 digital banking units (DBUs) across India on August 15 this year. 

 ET reported, the DBUs will be completely paperless and also act as digital financial literacy centres for the customers.

“All 75 districts have been finalised and allocated to respective banks to set up the infrastructure and train manpower for these specialised units (DBUs),” said an executive, who is privy to the matter. 

The districts that have been finalised for setting up DBUs are Leh, Srinagar, Lakshadweep, Aizawl, Kota, Nainital and Lucknow among others. 

In a statement, the Indian Banks’ Association said that all the public sector banks, 10 private sector banks and one small finance bank have already initiated the work to have these units operational by July 2022.

The latest developments come after the Finance Minister, Nirmala Sitharaman announced that the Indian government would set up 75 DBUs in 75 districts of India, during her visit to the US, in the last week.

At present, DBU-type models are already functional in the country. SBI Yono and Kotak 811 are prime examples of the same. 

RBI’s Guidelines For Digital Banking Units  

The RBI defines a DBU as a specialised, fixed-point business unit/hub housing a certain minimum digital infrastructure for delivering digital banking products and services in both self-service and assisted mode. Most services should be available in self-service mode at any time and throughout the year.

In the last month, the RBI permitted scheduled commercial banks (other than RRBs, PBs and LABs) with past digital banking experience to open the DBUs in Tier-1 to 6 centres, unless otherwise specifically restricted, without having the need to take permission in each case.

In January this year, the banking regulator allowed fintech companies to access credit bureaus, a decision that further enabled digital lending using fintech.

Credit bureaus are essentially companies that gather information relating to the credit ratings of individuals and make it available to creditors and lenders such as banks and finance companies, among others. 

Coming back to the original story, as per the RBI’s guidelines, products and services that DBUs can offer include opening of both saving and current, FD and RD accounts. Its digital kits would include mobile banking, internet banking, debit card, credit card and mass transit system cards while merchants’ digital kits would include UPI QR code, BHIM Aadhaar, POS, among others. 

The DBUs will make applications for and onboarding of customers for identified retail and MSME loans, including end-to-end digital processing, from online application to disbursal.

Considering the API component in DBUs, RBI notified that the API layer used to connect with external third-party application providers should be tested in an isolated/ test environment before being integrated into the bank’s core systems.