banking drive. the dbus would facilitate the customers in embarking the digital journey through digital modes / channels in a paperless, efficient, safe and secured environment, enhance financial inclusion and make available the full array of financial service products to the public in a seamless and efficient manner and enhance their banking experience. these dbus would also help in creating awareness on various aspects on digital banking, lessening the hesitation among customers towards availing digital financial services and thereby catalyse faster adoption of digitization. establishment of dbus is a noteworthy step to augment digital infrastructure for banking services in the country and facilitate a seamless banking experience. given the scope to scale up the financialisation of the indian economy10, and accelerate the pace of financial inclusion, there exists enough space for differentiated financial institutions to operate and grow. at the same time, it needs to be ensured that business models have to be sufficiently robust to provide the required financial resilience ; and good governance and technological standards are adhered to while striving to fulfil their desired objectives. v. innovation vs. customer protection 5 / 8 bis - central bankers'speeches technology - enabled innovation in financial services has been one of the greatest disrupters to the traditional way of banking. alternate models of lending are rapidly changing the market dynamics and affecting the role of traditional intermediaries. while banks have access to low - cost deposits, tech firms'advantage is that with technology's aid, they can utilise a range of data / alternate inputs for evaluating creditworthiness or who to lend to. from a regulatory standpoint, while there are strong arguments for making sure that the traditional vehicles of lending continue, there is a view that regulators are reluctant to encourage fintech led innovations and this approach is perceived to unfairly skew the balance in favour of banks. to my mind this would not be the right inference ; technological changes need to be imbibed in digestible doses to forestall destabilising of the financial system. no doubt, growth of tech led innovation need to be fostered, but preserving financial system stability is an overriding objective for the regulators and achieving the right mix of ensuring stability while fostering innovation remains the goal. therefore, regulators expect that the nature of partnership between traditional banks and the new fintech players to evolve into a symbiotic one, and not necessarily an adversarial one. this could create a win - win outcome for all the stakeholders, but one

for enabling a reasonable level playing field, there would have to be a gradual convergence in terms of the operating space and flexibility available to each class of entity. in terms of regulatory and prudential norms governing the public and private sector banking operations, there is already a significant amount of convergence. therefore, from prudential perspective, the debate is infructuous. however, the same level of convergence would have to be extended to managerial and operational flexibility of psbs based on certain governance standards. going forward, this will generate the requisite space for both psbs as well as private banks to grow their business and thrive. iv. business models – diversified vs specialised does the promise of niche, specialised banking still hold? with widespread digital revolution and massive penetration of internet in indian households, the need for aligning banking practices of 21st century with new aspirations of india was felt. based on this evolving scenario, a committee under the chairmanship of dr nachiket mor, the then member of central board of rbi, was constituted to study the scope of comprehensive financial services to small businesses and low - income households. the committee submitted its report in 2013 and discussed idea of'differentiated banking'in india on the basis of horizontal and vertical differentiation involving formation of separate stylised banks on the basis of regional / sectoral scope and activities ( deposit, transaction, or credit ). the concept of'payment bank'was first discussed in that report which started the formal discourse on differentiated banking. subsequently, the union finance minister announced in 2014 - 15 budget speech that rbi will create a framework for licensing small finance banks ( sfbs ) and other differentiated banks. in accordance with the announcement, reserve bank issued guidelines for setting up sfbs and payments banks ( pbs ) in november 2014. the specified objectives of setting up of sfbs, as envisaged in the licensing guidelines5, is to further financial inclusion by provision of savings vehicles, and increase supply of credit to small business units ; small and marginal farmers ; micro and small industries ; and other unorganised sector entities, through high technology - low - cost operations. on similar lines, pbs were set - up with the objective to further financial inclusion by providing small savings accounts and payments / remittance services to migrant labour workforce, low - income households, small businesses, other unorganised sector entities and other users6. since their inception, sfbs have started playing a progressive role in mobilising savings from and providing credit to