India opens 75 digital banking units to increase financial inclusion

India has launched 75 new digital banking units in villages and small towns across the country in a move that it said will help bring financial services and literacy to more citizens.

The DBUs are equipped with tablets and internet services to help individuals and small businesses open savings accounts; check their balances; transfer funds; apply for loans, and pay bills and taxes.

“Self-service mode will be available 24x7x365 days,” said Shaktikanta Das, governor of the Reserve Bank of India, in a virtual conference. “The banks are also free to engage the services of digital business facilities and correspondence to expand the footprint of DBUs.”

Eleven public sector banks, 12 private sector banks and one small finance bank are participating in the endeavour, which aims to spread digital financial literacy and raise awareness of cyber-security risks and safeguards.

Inaugurating the 75 DBUs virtually, Prime Minister Narendra Modi said the special banking system is a big step towards "ease of living", by providing maximum services from minimum digital infrastructure.

“It will also simplify the banking procedure while providing a robust and secure banking system. In a village, in a small town, when a person takes the services of a digital banking unit, everything from sending money to taking loans will become easy, online,” he added.

The DBUs are also expected to help banks that are now looking to reduce their physical footprint with fewer brick-and-mortar branches, with a "light" banking approach. The move may open up the rural market for service providers, besides providing a boost to credit flow.

Participating in the event from the US, union finance minister Nirmala Sitharama, said DBUs will go a long way in giving further impetus to digital banking in India and help the economy to move towards a cashless and inclusive economy.

“DBUs will enable people who don’t have a personal computer, laptop or even a smartphone to be able to access banking services," Sitharama said. "The government’s credit-linked schemes through the Jan Samarth portal will also be available for ordinary users."

Although there are currently more than a billion bank accounts in India, people living in remote areas have had to typically take a day off from work to visit a nearby city for their banking-related work.

“We have given top priority to ensure that banking services reach the last mile,” Modi said. “We not only removed the physical distance but, most importantly, we removed the psychological distance.”

The digital banking units are part of the Indian government’s efforts to serve people in the far-flung areas of the country.

In 2014, the government launched Jan Dhan Yojana, a scheme to get all citizens access to banking and financial services. Since then, more than 470 million bank accounts have been opened as part of the scheme.