NITI Aayog moots licensing, regulatory framework for digital banks

Digital banks will be subject to prudential and liquidity norms on a par with existing commercial banks

The Centre’s policy think-tank NITI Aayog has made a case for setting up digital banks, which would accept deposits and advance loans through digital means, and suggested a licensing and regulatory framework for such lenders.

A digital bank would be a bank defined in the Banking Regulation Act, 1949, and shall have its own balance sheet and legal existence. Such a bank would be different from the 75 Digital Banking Units (DBUs) -- announced by Finance Minister Nirmala Sitharaman in Union Budget 2022-23 -- which are being set up to push digital payments, banking and fintech innovations in underserved areas.