75 Digital Banking Units in different districts to be set up in consumer- friendly manner: Minister

What is the News?

In the Union Budget 2022, the Finance Minister has proposed setting up 75 digital banking units (DBUs) in 75 districts across India through scheduled commercial banks.

What are Digital Banking Units (DBUs)?

Simply put, digital banking involves taking all traditional banking activity online — doing away with paperwork like cheques, pay-in slips, demand drafts, and so on.

What are the benefits of Digital Banking Units(DBUs)?

Firstly, Digi banking units will help banks that are now looking to reduce their physical footprint with fewer brick and mortar branches, with a ‘light’ banking approach.

Secondly, DBUs will be cheaper to establish than a new branch, will also require less staff, and can be high-yield units for the parent bank. 

Thirdly, they can provide a better customer experience, aided by technology. These units will also encourage more financial literacy and a favorable outlook toward digital banking.

What is the significance of setting up DBUs?

RBI’s Digital Payments Index(RBI-DPI) which aims to capture the extent of digitization of payments has seen a growth of over 46% since the beginning of the pandemic in March 2020.

Indians in urban and Tier II and III cities are the first to adopt digital payments, but there is a need for further penetration of digital payments and banking in the country.

Hence, this initiative of setting up digital banking units will aid financial inclusion by getting more Indians on board.

Source: This post is based on the article “75 Digital Banking Units in different districts to be set up in consumer- friendly manner: Minister” published in AIR on 4rth April 2022.