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India to set-up 75 Digital Banking Units across rural India

Digital Banking Units

To further move towards achieving the goal of financial inclusion, India launched 75 digital banking units in villages and small towns across 75 districts on October 16. DBUs, being set up in collaboration with over 20 public and private banks, are aimed to provide maximum services with minimum infrastructure to people digitally, without involving any paperwork in every nook and corner of the country.

The banking units are brick-and-mortar outlets that will help individuals and small businesses with services like opening their savings accounts, accessing government-identified schemes, printing passbooks, and availing loans and insurance, etc. DBUs will be equipped with tablets and internet services to help bring financial services and literacy to more citizens.

Digital Banking Units

DBUs will also spread Digital Financial Literacy and special emphasis will be given to customer education on cyber security awareness and safeguards.

Eleven public sector banks, 12 private banks, and a Small Finance Bank are collaborating in the endeavor. Private sector lender ICICI Bank has launched four DBUs in Dehradun city of Uttarakhand, Karur in Tamil Nadu, Kohima in Nagaland, and Puducherry. Jana Small Finance Bank launched two DBUs in Bihar and Jharkhand whereas HDFC Bank launched its units in Haridwar, Chandigarh, Faridabad, and South 24 Parganas of West Bengal. Jammu and Kashmir Bank also launched two DBUs.

Financial inclusion, defined as access to affordable, appropriate financial services, is a key enabler for achieving inclusive and sustainable development worldwide. Research has shown that countries with stronger financial inclusion have stronger GDP growth rates and lower income inequality.  According to the Global Findex Database 2021 report, account ownership in India has doubled in the past decade, from 35 percent in 2011 to 78 percent in 2021. However, 540 million people in India have made no digital payments. And over 80 million adults made their first digital merchant payment during the pandemic.

Finance Minister Nirmala Sitharaman in her Union budget speech for 2022-23 had said the government would set up 75 Digital Banking Units in 75 districts of the country to commemorate the 75 years of independence of our country. Following this, in April this year, the RBI released guidelines on the “Establishment of Digital Banking Units (DBUs)”.

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