Digital Banking Unit – An Extension of Digital Banking

Digital Banking Unit

The government has recently launched the Digital Banking Unit to strengthen India’s banking ecosystem. How will it benefit the existing banking space? Let’s explore!

What’s Happening?

In the past few years, the government has taken steady steps towards digitalising various processes in India. Among many, digitalising banking transactions and making banking facilities available to every citizen has been a crucial motto. And hence, Digital Banking Units are set up in 75 districts in India, which offer every retail banking service to rural, semi-urban, tier III & below areas. 

What is a Digital Banking Unit?

Even today, the roots of digital banking have yet to reach rural areas. Individuals staying there still rely on traditional banking. They prefer visiting banks to avail of banking services. Besides this, many people in India do not have a bank account. So, to deepen the penetration of banking services, RBI has announced the introduction of Digital Banking Units.

Digital Banking Units are an extension of traditional banks. It is a place where people who do not have access to digital banking can go to perform transactions. Here, you can do all the banking processes on your own paperlessly. So, people living in rural areas do not have to go miles away to avail of banking services. They can simply visit a Digital Banking Unit. 

Services Offered at a Digital Banking Unit

Recently, ICICI Bank and HDFC Bank have announced to set up a digital banking unit of two types – Self Service Zone and a Digital Assistance Zone.

It will offer services like:

  • Opening a bank account, fixed deposit and recurring deposits.
  • ATM, a Cash Deposit Machine (CDM) and a Multi-Functional Kiosk (MFK) that offers services like depositing cheques, printing passbooks, and accessing internet banking.
  • Applying for debit cards, credit cards, and mass transit system cards.
  • Processing of loans in a paperless manner for merchants and MSMEs.
  • You can also interact with the bank’s chatbot to learn about various schemes. 
  • The Digital Assistance Zone will have branch officials assist customers with their queries and help them perform transactions. 

How Will DBU Benefit Customers and Banks?

Customers can avail of banking services anytime during the day throughout the year through its self-service mode. This will help customers with low to no digital experience avail the benefits of digital banking services.

By setting up Digital Banking Units, banks can reduce the number of branches in rural areas and attain economies of scale. This will reduce infrastructure and operational costs too. Moreover, digital banking units will improve financial literacy, and banks will be able to acquire customers from across the country. 

What’s Next?

ICICI Bank and HDFC Bank are already providing services like e-lobby (Bank branches without bankers). There are now 11 Public Sector Banks, 12 Private Sector Banks and one Small Finance Bank participating in the Digital Banking Unit Initiative. 

Once DBUs are in full swing, they will have the potential to transform and strengthen India’s banking ecosystem. 

That’s it for today. Don’t forget to share this knowledge with your friends.

Note: The companies mentioned in this article are for informational purposes.

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