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In order to mitigate the financial deepening challenges being faced in the country, Niti Aayog has proposed setting up of full-stack ‘digital banks’ or DBs, which would principally rely on the Internet and other proximate channels to offer their services and not physical branches. 

The Niti Aayog, in a discussion paper titled ‘Digital Banks: A Proposal for Licensing & Regulatory Regime for India’, makes a case and offers a template and roadmap for a digital bank licensing and regulatory regime for the country. It said digital banks are banks as defined in the Banking Regulation Act, 1949 (BR Act).

Besides, it mentioned ‘In other words, these entities will issue deposits, make loans and offer the full suite of services that the Banking Regulation Act empowers them to. As the name suggests, however, DBs will principally rely on the Internet and other proximate channels to offer their services.’