The Reserve Bank of India (RBI) on Thursday allowed existing banks to open digital banking units to offer products and services in urban as well as rural areas.

Finance minister Nirmala Sitharaman had announced in her budget speech in February that at least 75 digital banking units (DBUs) would be set up in 75 districts to commemorate 75 years of India’s independence as ‘Azadi ka Amrit Mahotsav’.

As per the RBI guidelines, the products and services to be provided at a DBU include opening of accounts, cash withdrawal and deposit, KYC updation, loans and complaint registrations.  Other services include making applications for onboarding of customer for retail and MSME loans with end-to-end digital processing, and services like cash withdrawal and cash deposit only through ATM and cash deposit machines. 

“Digital banking products and services would generally mean t .. mean those financial products/services whose designs and fulfilments have nearly end-to-end digital life cycle with the initial customer acquisition/product delivery necessarily taking place digitally through self-service or assisted self-service,” RBI said. 

A DBU is a specialised fixed point business unit housing certain minimum digital infrastructure to deliver digital banking products and services to to ensure convenient and cost-effective banking for customers. 

Scheduled commercial banks having experience in digital banking are allowed to open DBUs in tier 1 to tier 6 centres without prior RBI permission, the guidelines said.

Each DBU shall be housed distinctly with separate entry and exit provisions. These units will be separate from existing banking outlets with formats and designs most appropriate for digital banking users, the guidelines said.

“Banks are free to adopt an in-sourced or outsourced model for operations of the digital banking segment including DBUs. The outsourced model should specifically comply with the relevant regulatory guidelines on outsourcing," RBI said.