{"id":196627,"date":"2022-07-21T18:47:54","date_gmt":"2022-07-21T13:17:54","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=196627"},"modified":"2022-07-21T18:47:54","modified_gmt":"2022-07-21T13:17:54","slug":"niti-aayog-releases-report-on-digital-banks-proposes-a-licensing-and-regulatory-regime-for-india","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/niti-aayog-releases-report-on-digital-banks-proposes-a-licensing-and-regulatory-regime-for-india\/","title":{"rendered":"NITI Aayog Releases Report on Digital Banks; Proposes a Licensing and Regulatory Regime for India"},"content":{"rendered":"\n

Source: <\/b>The post is based on the article<\/span> \u201c<\/b>NITI Aayog Releases Report on Digital Banks; Proposes a Licensing and Regulatory Regime for India<\/b>\u201d<\/b> published i<\/span>n PIB <\/b>on 20th July 2022.<\/b><\/p>\n

What is the News?<\/b><\/h5>\n

NITI Aayog has released a report titled \u201cA Proposal for Digital Banks in India: Licensing & Regulatory Regime\u201d.<\/span><\/p>\n

What is the purpose of the report?<\/b><\/h5>\n

The Report offers a template and roadmap for a Digital bank licensing and regulatory framework in India.<\/span><\/p>\n

What are the key highlights from the report?<\/b><\/h5>\n

Need for Digital Bank<\/b>: <\/span>In recent years, India has made huge progress in furthering financial inclusion catalyzed by the Pradhan Mantri Jan Dhan Yojana, UPI among others.<\/span><\/p>\n

\u2013 However, credit penetration remains a policy challenge<\/strong>, especially for the 63-million-odd MSMEs that contribute 30% to GDP, 45% to manufacturing output, and 40% to exports, while creating employment for a significant section of the population.<\/span><\/p>\n

\u2013 Hence, there is a need to leverage technology effectively<\/strong> through steps like Digital Banks. This will help cater to these needs and bring the under-served further within the formal financial fold.<\/span><\/p>\n

What would be the structure of the Digital Bank suggested by the report?<\/b><\/h5>\n

A digital bank would be a bank defined in the Banking Regulation Act, 1949, and shall have its own balance sheet and legal existence. It would accept deposits and advance loans through digital means.<\/span><\/p>\n

They will principally rely on the internet and other proximate channels24 to offer their services and not physical branches.<\/span><\/p>\n

However, digital banks would be different from the 75 Digital Banking Units (DBUs)<\/a><\/strong> as announced by the Finance Minister in Union Budget 2022-23. DBUs are being set up to push digital payments, banking and fintech innovations in underserved areas.<\/span><\/p>\n

Roadmap for giving Digital Bank License:<\/b> The report has recommended a carefully calibrated three-step approach for digital bank license by the Reserve Bank of India(RBI):<\/span><\/p>\n

\u2013 In the first phase,<\/b> a restricted digital bank licence should be given to an applicant with restrictions in terms of volume\/value of customers serviced and the like.\u00a0<\/span><\/p>\n

\u2013 In the second stage<\/b>, the licensee will be put in a <\/span>regulatory sandbox <\/span><\/a>framework by the RBI.<\/span><\/p>\n

\u2013 Finally<\/b>, the issue of a \u2018full-scale\u2019 digital bank licence will be given based on the satisfactory performance of the licensee in the regulatory sandbox, including salient, prudential and technological risk management.<\/span><\/p>\n

Capital Requirement: <\/b>A Digital bank may be required to bring in \u20b920 crores of minimum paid-up capital in the restricted phase. Upon progression from the sandbox, a full-scale Digital Business bank will be required to bring in \u20b9200 crores.<\/span><\/p>\n

Regulatory Norms:<\/b> Digital banks will be subject to prudential and liquidity norms on a par with existing commercial banks.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article \u201cNITI Aayog Releases Report on Digital Banks; Proposes a Licensing and Regulatory Regime for India\u201d published in PIB on 20th July 2022. What is the News? NITI Aayog has released a report titled \u201cA Proposal for Digital Banks in India: Licensing & Regulatory Regime\u201d. What is the… Continue reading NITI Aayog Releases Report on Digital Banks; Proposes a Licensing and Regulatory Regime for India<\/span><\/a><\/p>\n","protected":false},"author":10317,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1566,3127,9],"tags":[3590],"class_list":["post-196627","post","type-post","status-publish","format-standard","hentry","category-daily-factly-articles","category-economy","category-public","tag-pib","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/196627","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10317"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=196627"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/196627\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=196627"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=196627"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=196627"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}