Banking News

financial inclusion: Review of digital banking units’ progress soon


The government may soon review the performance of digital banking units (DBUs) and their impact on digital lending and digital financial services.

The government wants lenders to use DBUs to push its latest schemes, including PM Vishwakarma, where it offers collateral-free loans at concessional rates to artisans and craftsmen.

“The Reserve Bank of India has also asked banks to submit feedback on DBUs. We will be working together with all stakeholders to further push the use of DBUs in digital financial inclusion,” said an official aware of the developments, adding that there are almost 100 DBUs functioning all across the country.

Based on the performance review, banks may be asked to scale up more such units or make changes to the existing strategy.

The government wants banks to tap into over 500 million accounts opened under the government’s flagship financial inclusion scheme, Pradhan Mantri Jan Dhan Yojana (PMJDY).

Review of Digital Banking Units’ Progress Soon

The average deposit in each PMJDY account has reached ₹4,069, and more than 55 million of these are receiving direct benefit transfers (DBT).

“The comprehensive review will include the products and services offered by DBUs and explore areas to enhance their scope of operations,” said the official quoted earlier.

A senior bank executive said the RBI has also asked lenders to take steps to further popularise DBUs. “We are already doing awareness campaigns. The idea is to use DBUs as the focal point for providing digital credit services and financial inclusion,” he added.

At the launch of DBUs in October 2022, Prime Minister Narendra Modi had said the economy of any country is as progressive as its banking system is strong, and that fintech would lead to a financial revolution.

“If Jan Dhan accounts had laid the foundation of financial inclusion in the country, then fintech would form the basis of the financial revolution,” he said while dedicating 75 DBUs to the nation.

As per an April 2022 RBI circular, the establishment of DBUs should be part of the digital banking strategy of a bank. “Each DBU will be headed by a sufficiently senior and experienced executive of the bank… who can be designated as the chief operating officer of the DBU,” the circular said.


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