The Reserve Bank of India (RBI) has already commenced work on the 75 digital banks to be set up across the country in just a fortnight after the initiative was announced in the budget by Finance Minister Nirmala Sitharaman.
Moneycontrol learnt that the Indian Banks' Association (IBA) was directed by the RBI to set up a working group which has already been formed. The group, which consists of IBA, private, public and small finance bank representatives, will soon convene for its first meeting, a senior official within the banking industry who did not wish to be named told Moneycontrol.
“The group has to now define what a digital banking unit is, what will be the services rendered by these units and also where they should be located. The aim is to have these units operational as early as July 2022,” he said.
As part of the budget announcements, the minister had said that 75 digital banking units will be set up across 75 districts. This initiative was announced to mark 75 years of Indian independence, and to push the benefits of digital banking in every nook and corner of the country.
RBI has already selected around 43 districts where these units can be set up, and the group will come up with recommendations on what more districts can be added.
“How it has been envisioned is that the units will serve three main purposes – customer acquisition, service as well as awareness. The group will work further on those lines and lay out a set of final objectives,” the above-mentioned person said.
People in the district will be able to get assistance starting from downloading the app of their bank to executing banking activities digitally.
Over the past two years, the pandemic and subsequent lockdowns pushed Indians further to choose digital modes as a means to access financial services. From payments to banking to investments, India has seen a surge in the usage of digital channels.
The RBI’s Digital Payments Index (RBI-DPI) which aims to capture the extent of digitisation of payments has also seen growth of over 46 percent since the beginning of the pandemic in March 2020.
The index takes March 2018 as the base and a denomination of 100 is assigned for that period. The number grew to 207.84 in March 2020 and to 304 in September 2021, as per the latest data by the RBI.
Indians in urban and Tier II and III cities are the first to adopt but there is a need for further penetration of digital payments and banking in the country and this initiative of setting up digital banking units will aid financial inclusion by getting more Indians on board.
The 2022 budget also stood out for the numerous mentions of digitisation with the minister extending support announced in the previous budget for the digital payments ecosystem to FY23 as well.
Additionally, the minister said that 100 percent of the 1.5 lakh post offices across the country will come in the core banking system to increase financial inclusion.
The post offices will allow access to accounts through net banking, mobile banking, ATMs, and provide online transfer of funds between post office accounts and bank accounts. This will be helpful, especially for farmers and senior citizens in rural areas, enabling interoperability and financial inclusion, the minister had said.
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