The Reserve Bank of India and NITI Aayog together have given a new suggestion to the government. Under this suggestion, it has been said to open a new DBU ie Digital Banking Unit. In the recent budget, Indian Finance Minister Nirmala Sitharaman had also pointed this out. In her speech during the budget, Finance Minister Nirmala Sitharaman had said that 75 digital banking units will be opened across the country. Right now the work on it has accelerated. Digital banking units can be seen in India soon. Initially, digital banking units are being considered for opening in major 75 districts of India.
The Reserve Bank of India has also issued its guidelines regarding the digital banking unit. Regarding this, the government does not seem to be agreeing with the Reserve Bank of India and NITI Aayog, but now. The Reserve Bank of India is raising questions about its potential. The same NITI Aayog is preparing to open a digital banking unit in the country as soon as possible.
What are Digital Banking Units (DBU)
In digital banking units, there is only one digital branch of the present main banks. Where the entire work is paperless. Emphasis is placed on adoption of new fintech technologies in digital banking units. These banks work 24 hours and 7 days.
Under DBU, there are some employees there to assist the customers. But the whole work is paperless. This also saves paper. In digital banking units, entire tasks like account opening, mutual fund account opening to loan landing are all done online. In a way, a digital banking unit is a self-service bank branch. It does not require any paper work.
The special thing about DBU is that they are always available to serve the customers. Whereas in traditional banks, national holidays are applicable. Similarly, traditional banks are also closed on every second Saturday of the month. Whereas this is not the case with digital banking units, which work 24 hours a day. The logic behind this by the Reserve Bank is that this will increase the working hours of the banks and this will directly benefit the economy of India. However, economic advisors are raising questions about its reality.
Reserve Bank of India issued guidelines regarding digital banking unit
The Reserve Bank of India has issued guidelines regarding digital bank units. Under this, rural banks, regional banks and payment banks will not be able to start digital banking units. Only commercial banks have been allowed to operate digital banking units. Apart from this, fintech banking has also not been allowed to open digital banking units. At present there is a digital bank like FI. Apart from this, small finance banks will also not be able to operate digital banking units.
Regarding the proceedings of digital banking units, the Reserve Bank has said that the office of both cannot be at the same place. There should be a separate exit door for digital banking units. The Reserve Bank of India does not want digital banking and commercial banking to be merged at one place. This will not show the real benefits of digital banking. Presently both commercial banks and their digital formats work together.
Now we will try to understand here what can be the advantages and disadvantages of digital banking units? Experts are already raising questions about their feasibility. While the number of supporters of the digital banking unit is also not less.
Apart from this, people will also be able to take advantage of the information and facilities of the flagship schemes of the government through digital banking units. In which there are schemes like Sukanya Samriddhi Yojana, Kisan Bima Yojana. The government will issue detailed guidelines regarding these schemes from time to time. Which will have to be accepted by Digital Banking Units. With this, people will be able to easily access government schemes.
The Reserve Bank of India has also issued guidelines regarding digital banking in its cyber security. Under these guidelines, commercial banks will have to ensure cyber security of digital banking these units.
Digital Banking Units (DBU) PROS
With the introduction of the Digital Banking Minute, it will be much easier for people to access the bank. At the same time, the working capacity of banks will also increase. Another big advantage of this is that banks will be able to set up their mini branches at a low cost.
Enhancing the efficiency of commercial banks
With the opening of the Digital Banking Unit, there will definitely be an increase in the working capacity of commercial banks. This is the biggest advantage of the Digital Banking Unit. Currently, traditional commercial banks are not always open. Commercial banks are closed on national holidays. Apart from this, commercial banks are also closed on every second Saturday of the month. While digital banking units will remain open for seven days. In these, customers can go and avail the services of the bank at any time. There will be a small team to assist the customer, which will be appointed by the commercial bank itself.
At present, the working style of the traditional commercial bank is completely different. Don’t have to do a lot of paper in this. On the contrary, the working capacity of digital banks will be more. This will increase the efficiency of commercial banks. Banks will be able to work at a faster pace. In this, facilities like video KYC, digital banking, bank account opening and digital loan approval will be available to the customers. Which will greatly increase the efficiency of traditional banks.
ease for customers
With the opening of the digital banking unit, it will become much easier for the customers. He will be able to go to the bank anytime and do his work in a few minutes. At present, long lines are seen in commercial banks. It also takes a lot of time. In such a situation, customers will not have to wait much to do any work related to banking. Customers can do their work by visiting the bank anytime as per their convenience. At present, commercial banks have a large number of national holidays. Due to which customers have to face problems.
Banks are also going to benefit from this. They will be able to expand their reach to the customers even more. Especially in rural areas, digital banking units can be very effective. Where it is not possible to reach commercial banks. The cost of a digital banking unit is low. And they can be operated and installed easily. Due to which the reach of banking will be established in rural areas as well.
Inclusive banking is also one of the goals of the government. Under which the main commercial banks of India have to be given access to the last person. Digital banking units will be able to play an important role in this goal of the government.
Competition from Fintech Banking
Questions are constantly being raised about the future of the commercial banks that exist at present, in such a situation, digital banking units can be an answer, according to a recent survey, 70% of Indians are preferring digital banking. The number will increase even more, as literacy will increase in the country, digital banks will also continue to expand, at present, traditional commercial banks are facing a tough challenge from Payments Bank and New Fintech Bank, the country’s well-known banker Uday Kotak said that if commercial If the banks do not change their way of working, the payments banks and other pintech banks will eat up the profits of these, in such a situation a question will arise on their existence, through the digital banking units of the government, now the traditional commercial banks will be able to extend their facilities till the grace. Can be easily delivered so that more and more people and customers can be attracted towards Digital Banking Minute The special thing of Digital Banking in it is that it will only be able to set up commercial banks. Commercial banks are likely to get an edge in the market. It is being expressed that the government does not want to let the commercial banks weaken at any cost because it is also important for national security, on the other hand, commercial banks are still doing most of the loans. Experts say that commercial banks There may not be a replacement fintech bank.
people’s access to government facilities
The biggest advantage of the Digital Banking Unit will be that people will be able to easily access government facilities. People will also get easy access to the government schemes released at present, earlier traditional banks were not able to do this work properly. Because they already have a lot of work load. In such a situation, if the government has to implement any government scheme now, then it will be done in a short time. The Reserve Bank of India has also issued a guideline regarding this. Digital banking units will also have the facility to avail benefits of government schemes. This will be a mandatory part of all Digital Banking Units. The aim of the government is inclusive development. Digital Banking Unit is being set up to achieve this goal.
There are many such government schemes running in our country. About which people are not even aware. This information will be easily accessible to the people through the digital banking universe. It will also be made much easier for them to apply for government schemes online. A team will always be available to assist people. Which will also give information about government schemes. This is an important goal of the Digital Banking Unit. that the government wants to achieve.
Cons of Digital Banking Units (DBU)
Whenever we do any work, there are two sides to it. There are some advantages of Digital Banking Units (DBUs). So experts are also raising questions about this.
Experts are also raising questions about the credibility of the digital banking unit. Experts say that the digital banking unit will be like a burden on the commercial banks currently operating. Due to which digital banking units will be a liability for commercial banks instead of assets. Due to this, the profit margin of commercial banks will also be affected. We try to understand what is that disadvantage? About which experts are warning the government.
(DBU) Cyber Security Questions
Questions are being raised regarding the cyber security of the Digital Banking Unit. The present banking sector is constantly facing cyber attacks. Due to which questions are also being raised about the reliability of digital banking units. reserve
Bank of India and Government of India have already taken big steps for digital economy.
Due to the ongoing war between Russia and Ukraine, people’s understanding of cybersecurity has increased. Although it is true that the Reserve Bank of India has issued a guideline regarding cyber security. But still cyber security will be a challenge for the digital banking unit. Cyber security will remain a big question due to increasing incidents like Didos attacks and data breaches. The answer to which is currently not visible with any country in the world including India.
At present, apart from the conventional war between Russia and Ukraine, cyber warfare is also going on. Digital banking units can become a major threat to India if war happens. Enemy countries can easily target the digital banking unit. Due to which the banking infrastructure of India can be affected.
Question regarding need for digital banking units
Questions are also being raised about the need for digital banking units. At present, many fintech companies are offering similar facilities to their customers. Experts say that while already this type of fintech bank is available in India. Then what is the need of Digital Banking Units? Digital banking units can work well there. Where Fintech Bank is not available. But there is no such problem with India. In such a situation, questions are being raised about the practicality of digital banking units.
Experts say that digital facilities are being given by banks nowadays through mobile phones. Whereas the digital banking units are similar to the present day traditional banks. In which the customer has to go to the branch and avail the facilities. In such a situation when all the facilities are available on the smartphone itself. So why would customers visit digital banking units?
Experts say that nowadays only traditional banks have a digital banking unit. From where customers can avail all online facilities. While doing the same work with traditional banks. Then what is the need of Digital Banking Units?
As far as the reach of government schemes is concerned, traditional banks are already ready for this. Information about government schemes can also be obtained from traditional banks.
The cheap internet data has also made people’s access to government schemes much easier.
Experts say that digital banking units are not required to establish access to government schemes. Rather it is necessary that we launch a campaign online. Through which people can take advantage of government schemes. For this, any Android and iOS application can be launched. Through which people can take advantage of all government schemes at one place. Experts say that there is a need to launch an integrated digital system instead of a digital bank for government schemes.
fast changing technology
Nowadays technology is changing at a very fast pace. In such a situation, digital banking units will also have to be upgraded from time to time. This will increase the cost of commercial banks. It may also happen that after 5 years of today, the technology of these digital banking units becomes very old. And the customers don’t need it.
We have seen this in the case of Paytm. Paytm was initially launched as a wallet. Then it was considered a very successful product. But shortly after this, the Unified Payment Interface was launched. After which Paytm also had to integrate UPI with its platform. Today people do not need Paytm Wallet. Rather, your bank account works like a wallet. The same applies to digital banking units.
Government’s experiments have already failed regarding banking
It is not that digital banking is a new thing. Government’s experiments on banking have failed in the past, especially NBFCs, questions have been raised about this? Government called NBFCs (Non-Banking Financial Institutions). It’s like a nightmare. Which the government wants to forget as soon as possible.
The government issued a large number of NBFC licenses. But today the condition is that most of the NBFCs have been closed. Or merged with banking units. You can also take the payment bank in the same way. The Reserve Bank of India had initially issued eight payments bank licenses, but at present only four payments banks are functioning properly. Which includes Paytm Payments Bank, Airtel Payments Bank. Reliance Jio’s Jio Payment Bank is also not fully functional yet. In such a situation, the question is arising that when the government’s experiments regarding banking have already failed. So why is the government doing this new experiment? While Unified Payment Interface is working properly.