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Digital Onboarding Stalls in Regional Rural Banks Amid Lagging Progress
Regional Rural Banks grapple with digital onboarding delays, highlighting service gaps like the absence of internet banking and debit card facilities. Concerns mount over Sponsor Banks' responsibility in infrastructure and service implementation.
Author: Saurav Kumar
Published: April 17, 2024
Digital onboarding and technology upgradation are pressing concerns for Regional Rural Banks (RRBs), as they grapple with significant delays in implementing essential digital solutions. The All India Regional Rural Bank Employees Association (AIRRBEA) has penned a letter to the chairpersons of all 43 RRBs, urging them to prioritise infrastructural support to address this critical need.
The letter underscores the disparity between the digital capabilities of RRBs and other banks in the same locality. Many customers are opting to switch to institutions offering more advanced digital services, highlighting the urgent need for RRBs to enhance their digital offerings. Despite substantial investments in backdated software and hardware provided by Sponsor Banks, RRBs continue to struggle to meet customer demands due to the absence of comprehensive digital solutions.
Image: AIRRBEA Letter on Digital Onboarding
Digital Evolution Hindered by Sponsor Banks' Slow Progress
According to an official document from the January 19 meeting involving officials from Sponsor banks, RRBs, and the Department of Financial Services (DFS), it was revealed that RRBs are mandated to provide 22 essential services. However, out of 43 RRBs, only 4 (3 SBI sponsored RRBs and 1 UBI sponsored RRB) have successfully activated 21 services. Meanwhile, 10 RRBs have fewer than 15 services operational. Notable services include internet banking and mobile banking.
The document highlights the sluggish pace of progress and instructs Sponsor banks and NABARD to ensure the implementation of 17 out of the 22 services by the end of 2024.
Essential services slated for implementation encompass internet banking, mobile banking, National Electronic Fund Transfer (NEFT), issuance of debit card and ATM services. Reports from grameen banks suggest that most of the RRBs currently lack these vital services.
Frustration Mounts Over Digital Upgradation Delay
Expressing disappointment, Venkateshwar Reddy, Secretary General of AIRRBEA, voiced concern to Kanal, stating, “It is disheartening to witness Sponsor Banks disregard the urgent need for digital enhancement in RRBs. The absence of essential digital services not only impedes RRBs' customer retention efforts but also undermines their competitiveness in the current market.”
Reflecting on the sluggish progress, another RRB banker from the north-eastern region said, “The pace of digital onboarding resembles that of a snail, as evidenced by a recent server problem at an RRB that took days to resolve. It underscores the deficiencies of Sponsor Banks, who charge for providing necessary facilities without ensuring their quality.”
The letter serves as a poignant reminder of the critical role that digital transformation plays in ensuring the meaningful survival of RRBs and underscores the importance of collaborative efforts between RRBs and Sponsor Banks to address this pressing issue.