The RBI, with a view to improve availability of digital infrastructure for banking services and widen the reach of digital banking services, by its Circular of April 07, 2022, prescribed detailed guidelines for certain banks to set up ‘Digital Banking Units’ (‘DBU Guidelines’). The salient features of the DBU Guidelines are as follows:

i.     The DBU Guidelines are applicable to all domestic scheduled commercial banks (excluding regional rural banks, payments banks and local area banks), and permit such banks with past digital banking experience to open Digital Banking Units (‘DBUs’) under their retail banking segments, in ‘Tier 1’ to ‘Tier 6’ centres, unless otherwise specifically restricted by RBI. DBUs would be treated as ‘banking outlets’ of banks;

ii.    DBUs are specialised fixed point business units / hubs (having minimum digital infrastructure) for delivering digital banking products and services along with servicing existing financial services and products digitally which enables customers to have cost effective / convenient access and enhanced digital experience in an efficient, paperless, secured and connected environment;

iii.   Digital banking products are those products / services whose designs and fulfilments have a nearly end-to-end digital life cycle with initial customer acquisition / product delivery taking place only digitally through self-service or assisted self-service;

iv.    Digital banking refers to electronic banking services provided by licensed banks through electronic media (websites and mobile phones) or digital channels which involve significant level of processes automation and cross-institutional capabilities running under enhanced technical architecture and a differentiated business model / strategy;

v.     The DBU Guidelines set out detailed requirements for infrastructure and resources of DBUs, including the requirement to have separate entry and exit provisions, cyber security safeguards, suitable smart equipment and technological requirements for front-end and back-end functions of DBUs and the requirement to have a sufficiently senior and experienced executive as Chief Operating Officer (COO) of the DBU;

vi.    The DBU Guidelines also set out detailed requirements relating to customer education, customer grievances, digital business facilitator / business correspondents for banks and reporting requirements; and

vii.   The board of directors of banks (or a committee of the board) is required to review the progress and key performance indicators of digital banking services including that of DBUs covering business and risk aspects of the segment.