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Guidelines on Establishment of Digital Banking Units


1.1. On April 14, 2022, Reserve Bank of India (“RBI”) has issued – Guidelines on Establishment of Digital Banking Units vide notification 2022-23/19 DOR.AUT.REC.12/22.01.001/2022-23 (“Guidelines”).


2.1. The Guidelines shall be applicable to all domestic scheduled commercial banks except regional rural banks, local area banks and payments banks.


3.1. Any scheduled commercial bank having experience in digital banking is permitted to open DBUs in Tier 1 to Tier 6 centres unless otherwise restricted.

3.2. DBUs shall be treated as Banking Outlets (“BOs”) as defined under “Rationalisation of Branch Authorisation Policy- Revision of Guidelines” circular dated May 18, 2017.

3.3. For the purpose of regulatory compliance with respect to the opening of BOs, a DBU shall be treated as established where the substantial part of DBU’s new business is proposed to be sourced, regardless of the physical location.


4.1. Each DBU shall be housed separately, with its own entry and exit provisions.

4.2. Each bank shall select appropriate smart equipment for the front-end or distribution layer of digital banking, such as interactive teller machines, interactive bankers, service terminals, teller and cash recyclers, etc. and shall be in-sourced or out-sourced in compliance with relevant regulatory guidelines.

4.3. The back-end for digital banking products and services, including the Core Banking System and other back-office related information systems, shall be shared with incumbent systems while maintaining logical separation.

4.4. Application Programming Interface (“API”) layer is used to connect external third-party application providers, shall be tested before integration into bank’s core systems backed by a comprehensive risk evaluation and adequate documentation.

4.5. For activities in the digital banking segment, including DBUs, banks have the option of using in-sourced or out-sourced models with relevant regulatory compliances.

4.6. Remote or in situ assisted mode arrangements shall be put in place by banks to optimally blend digital infrastructure with ‘human touch’.

4.7. To ensure the physical security of the infrastructure of the DBU, adequate safeguards for the cyber security of the DBUs shall have to be ensured by the banks.


5.2. Minimum products and services that shall be offered by DBUs are annexed in the Guidelines.

5.2.1.Minimum offering of products and services on the liability side:

  • Account Opening: saving bank account under various schemes, current account, fixed deposit and recurring deposit account;

  • Digital Kit for customers: mobile banking, internet banking, debit card, credit card and mass transit system cards; and

  • Digital Kit for Merchants: UPI QR code, BHIM Aadhaar, POS, etc.

5.2.2.Minimum products and services on the asset side:

  • Making applications for and onboarding customers for identified retail, MSME or schematic loans; and

  • Identified Government-sponsored schemes covered under the national portal.

5.2.3.Minimum digital services that shall be offered by DBUs are as follows:

  • Cash withdrawal and cash deposit only through ATM and cash deposit machines respectively;

  • Passbook printing / Statement generation;

  • Internet Banking Kiosk;

  • transfer of funds (NEFT/IMPS support);

  • updation of KYC / other personal details, etc.;

  • Lodging and tracking of grievances digitally;

  • Account Opening Kiosk;

  • Kiosk with e-KYC/ Video KYC;

  • Digital onboarding of customers for Government schemes.

5.3. The DBU shall offer any product or service that can be delivered digitally via internet banking or mobile banking except those not permitted under the Banking Regulation Act 1949.


6.1. For the purpose of disclosure under Accounting Standard 17 (AS-17), digital banking segment is a sub-segment of retail banking segment.

6.2. Banks shall report the Digital Banking Segment as a sub-segment inside the existing "Retail Banking Segment" as required under “RBI (Financial Statements – Presentation and Disclosures) Directions, 2021.

6.3. DBU performance update shall be furnished to Department of Supervision, RBI on monthly basis and in a consolidated form in Annual Report of the bank.

6.4. Banks shall provide information about the opening, closing, merger, or shifting of DBUs to the Department of Statistics and Information Management (DSIM), RBI.


7.1. A senior and experienced executive of a bank preferably Scale III or above for PSBs or equivalent grades for other banks shall head the DBU as the Chief Operating Officer (“COO”).

7.2. DBUs shall employ a variety of tools and approaches to provide hands-on customer education on safe digital banking products and practices to adopt digital penetration of the financial services that shall be monitored.

7.3. To broaden the virtual footprint of DBUs, banks shall be able to recruit digital business facilitators/business correspondents in compliance with relevant regulations.

7.4. There shall be an effective digital framework in place to provide real-time grievance redressal of consumer complaints related to the DBUs' business and services.

7.5. Role of the Board of Directors (“Board”) is as follows:

7.5.1.The Board shall ensure provisions of regular on-site and off-site monitoring systems covering all aspects of the Guidelines.

7.5.2.At a sufficient interval, the Board or a Committee of the Board shall examine the progress and key performance indicators of digital banking services.

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