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NITI Aayog releases

UPSC CURRENT AFFAIRS | NITI AAYOG RELEASES REPORT ON DIGITAL BANKS (DBs) | 22ND JULY | LIVEMINT

SYLLABUS SECTION: GS III (ECONOMY)

WHY IN THE NEWS NITI Aayog releases?

NITI Aayog releases in its report, has made a case for setting up DBs and mooted for a full-scale DB license.

MORE FDETAILS:

  • It makes a case and offers a template and roadmap for a digital bank licensing and regulatory regime for the country
  • It studies the prevailing gaps, the niches that remain underserved, and the global regulatory best practices in licensing digital banks.
  • Report highlights the challenges presented by the ‘partnership model’ of neo-banking–which has emerged in India due to a regulatory vacuum and in the absence of a digital bank license.

DIGITAL BANKS:

  • A DB would be a bank define in the Banking Regulation Act, 1949, and shall have its own balance sheet and legal existence in Niti Aayog Releases.
  • Such a bank is different from Digital Banking Units (DBUs) —announce by Finance Minister (Budget 2022-23)—which are set up to push digital payments, banking and fintech innovations in underserve areas.
  • Digital Banking Unit (DBU)
  • DBU is a specialize fixed point business unit housing a certain minimum digital infrastructure for delivering digital banking products and services.
  • DBs principally rely on the internet and other proximate channels like Near Field Communication to offer their services and not physical branches.
  • It improves outreach of financial inclusion, ease of transferring money within the country or internationally etc.
  • Concerns: Prone to malware attacks or phishing, digital illiteracy, lack of internet connectivity etc.

Read more: UPSC CURRENT AFFAIRS

SOURCE: LIVEMINT

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