The Reserve Bank of India has issued guidelines for setting up of digital banking units for banks. This will follow the announcement made by Finance Minister Nirmala Sitaram in the Union Budget to set up 75 DBUs in 75 districts to mark the 75th anniversary of our country’s independence. As per the guidelines, scheduled commercial banks with previous digital banking experience are allowed to open digital banking units in Tier-1 to Tier-6 centers without the need for RBI permission in each case. It will be treated like a bank outlet.
A digital banking unit is a unique fixed point business unit / hub that has a certain minimum digital infrastructure for the delivery of digital banking products and services, as well as digitally deliver existing financial products and services, both in self-service and support mode, to make them cost effective. Facilitates products and services in an efficient, paperless, secure and connected environment to enable. Access and better digital with most services available year-round. A digital banking unit is a specialized fixed point business unit / hub that has a certain minimum of digital infrastructure for delivering digital banking products and services. The purpose of the Digital Banking Unit is to expand digital financial services and financial inclusion.
As per the guidelines, customers with previous digital banking experience will be able to reach out which will be beneficial in rural areas. Banks are free to adopt in-sourced or outsourced models for the operation of the digital banking segment, including the digital banking unit. The outsourced model specifically adheres to the relevant regulatory guidelines on outsourcing. In addition, the establishment of a digital banking unit should be part of the bank’s digital banking strategy.
The operational governance and administrative structure of the digital banking unit will be aligned with the bank’s digital banking segment. To accelerate each of the digital banking initiatives, each digital banking unit will be led by a sufficiently senior and experienced executive of the bank, preferably on a scale of three or more for public sector banks or equivalent grades for other banks who may be appointed as chief executive officer. In addition to ensuring the physical security of DBU’s infrastructure, banks will have to ensure adequate security for DBU’s cyber security.
Each DBU must provide a certain minimum of digital banking products and services. Such products should be on both the balance sheet liabilities and assets of the digital banking segment and be deemed necessary. Digital value-added services in traditional products also qualify in this way. DBU is expected to move from standard offerings to more structured and custom made products through the use of its hybrid and high quality interactive capabilities.
Banks will have the option of linking digital business facilitators / business correspondents with the relevant regulations to expand DBU’s virtual footprint. There should be adequate digital mechanisms to provide real time assistance to customer complaints arising from business and services offered by real or business facilitators / correspondents and to redress customer complaints. Provisions for a regular on-site and off-site monitoring system covering all aspects of the guidelines must be ensured. In addition, the progress of digital banking services and key performance indicators, including DBU, will be reviewed separately by the board or board committee at appropriate intervals. Digital banking is a necessity of the present age, there is a challenge but it is futile to face the challenge without taking action so these units will solve the problem in time and solve the complexities of the people.