Banks can open Digital Banking units (DBUS) under RBI guidelines to enhance such digital banking in the interiors of the country. Instead of a brick-and-mortar bank branch, of late, digital banking is preferred. The guideline issued by the RBI apply to scheduled commercial banks (SCBs), and not to RRBs, payments banks and local area banks.

Each DBU will be designed in response to the needs of the digital users. DBUs must offer minimum digital banking products and services. Such products should be on both liabilities and assets side. To illustrate, on the liabilities side, banks must offer account opening services, digital kits for customers, internet banking, debit cards, credit cards. It will offer digital kits for merchants, including UPI QR codes, Aadhar and POS infrastructure.

A DBU onboards retail MSME customers, and offers schematic loans. It administers government-sponsored schemes. The seven specific services listed include cash withdrawal and deposit through ATMs and cash deposit kiosks.

DBU must have help lines and grievance redressal mechanism. Banks can use insourced or outsourced model for operations. The services will be aligned with the digital banking strategy of the bank. It will be headed by a senior executive (scale III and above or its equivalent in private sector such as COO).

It is a part of the retail banking segment.

India’s FM has declared that India proposes to set up ‘digital only’ NBFCs. India also is in the process of setting up digital banks, about 75 of them in 2022.