75 districts will have digital banking units by July: Indian Banks’ Association

All state-owned banks, 10 private sector banks and a small financial bank have started work to operationalize 75 digital banking units (DBUs) by July 2022, the Association of Indian Banks (IBA) announced on Thursday.

State Bank of India will create the largest number of DBUs (12), followed by Punjab National Bank and Union Bank of India (8 each), Bank of Baroda (7), Canara Bank (6 ) and India Bank (3). Among the private lenders, ICICI Bank and Axis Bank will establish three DBUs each and HDFC Bank two DBUs, according to the IBA.

The move is in line with Finance Minister Nirmala Sitharaman’s latest budget announcement to set up these units in 75 districts to commemorate 75 years of Indian independence.

The progress of the pilot implementation is being monitored by a committee of the Reserve Bank of India, the IBA said in a statement.

DBUs will be treated like bank outlets and each unit must be housed separately, with separate entry and exit arrangements, the IBA said. Every DBU must offer certain minimum digital banking products and services, both on the asset (loan) and liability (deposit) side.

Banks will have the flexibility to engage digital business facilitators/business correspondents in sync with relevant regulations to expand the virtual footprint of DBUs.

“Furthermore, there must be an adequate digital mechanism to offer real-time assistance and remedy customer complaints arising from the business and services offered by DBUs directly or through business facilitators/correspondents,” said the IBA.

A panel for the establishment of the DBUs has been set up under the leadership of Ajay Kumar Choudhary, Executive Director of the RBI’s Fintech Department, with representation from senior officials from the central bank, some banks and IBA. A working group headed by IBA CEO Sunil Mehta and some banks has been set up to assist the committee.

Andrew B. Reiter