Digital Banking Units (DBU)

In News

• The Prime Minister recently dedicated 75 Digital Banking Units (DBU) across 75 districts to the nation.

About Digital Banking Units (DBU)

• Background:
  • It was part of the Union budget speech for 2022-23 where the Finance Minister announced setting up the 75 DBUs in 75 districts to commemorate our country’s 75 years of independence. 
• Initiative:
  • This is a joint initiative of the Government, the RBI, the Indian Banks Association and the participating banks. 
    • 11 Public Sector Banks, 12 Private Sector Banks and one Small Finance Bank are participating in the endeavour. 
• Meaning:
  • The DBUs will enable those who do not have ICT infrastructure to access banking services digitally. They will also assist those who are not tech savvy to adopt digital banking. 
• Aim:
  • In such a banking setup, the government aims to provide maximum services with minimum infrastructure, and all of this happens digitally without involving any paperwork.
• Services:
  • It includes banking facilities like opening of savings account, balance-check, print passbook, transfer of funds, investment in fixed deposits, loan applications, stop-payment instructions for cheques issued, application for credit / debit cards, view statement of account, pay taxes, pay bills, make nominations, etc. 
  • The DBUs will also facilitate on boarding to Government credit link schemes through the Jan Samarth portal and end-to-end digital processing of small ticket MSME/retail loans. 
• The products and services will be offered to customers in 2 modes:
  • Self Service Mode
  • Digital Assistance Mode
• DBUs will be different from traditional branch in following aspects:
  • They will provide banking services including cash deposit & withdrawal 24 x 7.
  • Services shall be provided digitally.
  • People not having connectivity or computing devices can do banking transactions from DBU in a paperless mode.
  • Bank staff will be available to help and guide users for banking transactions in assisted mode.
  • Will help in providing digital financial literacy and create awareness for adopting digital banking.

Significance of the move

• Financial inclusion:
  • It will further financial inclusion and enhance banking experience for citizens.
• Ease of Living:
  • It is a big step in the direction of Ease of Living for the common citizens.
• Robust banking:
  • It will also simplify the banking procedure while also providing a robust and secure banking system.
• Beneficial for rural India:
  • People living in small towns and villages will find benefits like transferring money to availing loans.
• Cost effective services: 
  • DBUs will enable customers to have cost-effective, convenient access and enhanced digital experience of banking products and services throughout the year. 
• Digital Financial Literacy: 
  • It will spread Digital Financial Literacy and special emphasis will be given to customer education on cyber security awareness and safeguards. 
• Removing psychological distance:
  • It will not only remove the physical distance but will also remove the psychological distance as this step will reduce the distance between the poor and the banks.
• Eliminating digital divide: 
  • This combination of technology and economy is enhancing the dignity and affordability for the poor and empowering the middle class, while at the same time it is also eliminating the digital divide of the country. 
• Good Governance: 
  • This system has given rise to immense possibilities for growth for the private sector and small-scale industries as well. 
• Transparency in the identification of NPAs: 
  • The resolution of NPA-related issues is expedited with the help of IBC while promoting the use of technology and analytics for loans, for the creation of a transparent and scientific system.

Steps taken by the Government towards Digital Banking

• Extensive Post Office network
  • Harnessed via India Post Banks for providing the banking needs to the common citizens.
• Jan Dhan Bank accounts:
  • These accounts enabled the government to provide insurance to the vulnerable at a very low premium. 
  • This opened the way for loans for the poor without collateral and provided Direct Benefit Transfer to the accounts of the target beneficiaries.
• UPI: 
  • It is the first technology of its kind in the world. It is a system that powers multiple bank accounts into a single mobile application (of any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. 
• Rupay cards: 
  • Today 70 crore indigenous Rupay cards are in operation, a vast change from the days of foreign players and the elite nature of such products.
• DBT: 
  • It eliminated corruption. More than 25 lakh crore rupees have been transferred in various schemes via DBT.
• Digital currency: 
  • It is based on blockchain technology. Elimination of the hassle of physical currency and environmental benefits are its key advantages.
• GEM: 
  • Today the small industries or MSMEs are also participating in government tenders through a system like GEM. They are getting new business opportunities.

Way Forward

• Empowering citizens: 
  • The aim of the government is to empower the common citizen and make them powerful and as a result policies are made keeping in mind the last person and the entire government moving in the direction of their welfare.
• Coverage: 
  • Today more than 99 percent of villages in India have a bank branch, banking outlet or a ‘banking mitra’ within 5 km radius.
  • Today the number of branches per one lakh adult citizens in India is more than countries like Germany, China and South Africa. 
• Global institutions: 
  • The IMF has praised India’s digital banking infrastructure. The credit for this goes to the poor farmers and labourers of India, who have adopted new technologies, made it a part of their lives. 
  • The World Bank has even gone so far as to say that India has become a leader in ensuring social security through digitization. 
• Self-reliant India: 
  • Digital economy today is a great strength of our economy, of our startup world, of Make in India and of self-reliant India. 

Source: PIB