Tag: digital rupee

RBI Proposes Support for CBDC Distribution via Non-Bank Payment Operators

Several countries, including India, are expanding central bank digital currency (CBDC) trials, hoping to integrate then with their existing financial systems. The Reserve Bank of India has proposed the expansion of support for the digital rupee CBDC within the retail ecosystem beyond banks. In the coming days, the RBI is expected to start circulating the digital rupee through payment system operators who are not part of the banking system. The detail was disclosed on Friday in a statement by RBI Chief General Manager Yogesh Dayal.

Until now, India’s CBDC distribution was being conducted by banks that are part of its trials. Moving forward, however, RBI is likely to allow platforms like Google Pay and PhonePe also to distribute the digital rupee in the retail ecosystem.

“CBDC pilots in the retail and wholesale segments are underway with more use-cases and more participating banks. Continuing with this approach, it is proposed to make CBDC-retail accessible to a broader segment of users in a sustained manner, by enabling non-bank payment system operators to offer CBDC wallets,” Dayal said in a prepared statement issued by the RBI.

CBDCs are a virtual representation of the fiat currency of a country. Built on blockchain networks, they work like cryptocurrencies but are issued by a central bank. Through CBDCs, people can process quick payments of hefty amounts and all the transaction history will be stored in a permanent, unchangeable format.

“This is expected to enhance access and expand choices available to users apart from testing the resiliency of the CBDC platform to handle multi-channel transactions. Necessary changes will be made to the system to facilitate this,” the official said in the statement.

Since December 2022, the RBI has clocked an impressive feat in conducting research and development around the digital rupee. The CBDC is currently in an advanced trial phase in India.

In February this year, the RBI had spoken about its plans to experiment with offline solutions to drive the adoption of CBDC in those parts of India that are not as well connected to the Internet as developed cities.

In 2023, the State Bank of India introduced UPI interoperability with the digital rupee. Canara Bank also rolled out a similar offering.

“As per the data published in the balance sheet of the Reserve Bank of India as on March 31, 2023, the e-Rupee issued for CBDC (Retail) at Rs 5.70 crore,” the RBI had stated in February while answering an RTI appeal.

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SBI Introduces UPI Interoperability With eRupee CBDC for Seamless Transactions

The State Bank of India (SBI) has announced the implementation of Unified Payments Interface (UPI) interoperability with the Digital Rupee, also called as Central Bank Digital Currency (CBDC).

With this move, SBI aims to deliver convenience and accessibility to its customers. This feature, accessible through the ‘eRupee by SBI’ application will empower users to effortlessly scan any merchant UPI QR code for transactions.

SBI was among the first few banks to participate in the RBI’s retail digital e-rupee project.

Unified Payments Interface (UPI) is India’s mobile-based fast payment system, which facilitates customers to make round-the-clock payments instantly, using a Virtual Payment Address (VPA) created by the customer. UPI payment system has become hugely popular for retail digital payments in India, and its adoption is increasing at a rapid pace.

“The seamless integration of CBDC with UPI marks a significant leap for the bank, enhancing the acceptance and utilization of digital currencies in everyday transactions,” said SBI in a release. “Bank feels that this integration will be a game changer for the digital currency ecosystem.”

“By bridging the gap between CBDC and the extensively used UPI platform, SBI aims to revolutionize payments made in India. With this move in the realm of digital payments, the future of CBDC integration appears promising,” it added.

The digital rupee, also called as Central Bank Digital Currency (CBDC), was launched by the Reserve Bank of India on a pilot basis on December 1, 2022. In the Union Budget 2022-23, Finance Minister Nirmala Sitharaman announced about rolling out of the digital currency called Central Bank Digital Currency (CBDC).

CBDCs are an electronic form of a sovereign currency. As is the case with cash, it will not earn any interest but can be converted to other forms of money, like deposits with banks.

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Reserve Bank of India Calls on More Lenders to Take Part in Pilot for Retail Digital Rupee: Report

The Reserve Bank of India (RBI) has called on a wider set of lenders to take part in pilot programmes using the central bank digital currency (CBDC) as it tries to increase transactions, three bankers told Reuters on Wednesday.

Nearly two dozen central banks across emerging and advanced economies are expected to have digital currencies in circulation by the end of the decade, the Bank for International Settlements (BIS) found in a survey, published on Monday.

Last year, the RBI began trials using CBDCs, termed e-rupees, in both the wholesale and retail markets.

Currently, large state-owned and private lenders, including State Bank of India, Bank of Baroda, ICICI Bank, HDFC Bank, Kotak Mahindra Bank and Yes Bank, are among those participating in the pilot project.

“The RBI has asked smaller banks to either tie up with fintech players or develop their systems to start CBDC pilots this year,” said the technology head of a state-owned bank, who attended the meeting with RBI officials on Tuesday.

“We will now have to float tenders to get interested fintech partners on board and evaluate the costs involved. This process is expected to take about four-five months.”

The bankers did not wish to be named as they were not authorised to speak to the media.

The RBI aims to reach a target of one million CBDC transactions per day by the end of this year, RBI deputy governor T Rabi Sankar said on Tuesday.

There were 1.3 million customers and 0.3 million merchants, who used CBDC as of June 2023, he said.

“By getting more banks to participate in the pilots, the RBI wants to see if there are any glitches in implementation and conduct pilots on a large user base,” said another banker with a state-owned bank.

“We are in the advanced stage of submitting a CBDC pilot request to the RBI. We expect the approval to come in the next one-two months.”

The central bank has also asked smaller banks to seek feedback from those currently conducting the pilots, the bankers said.

The RBI did not immediately respond to a Reuters’ email seeking comment.

© Thomson Reuters 2023

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RBI’s CBDC Can Now Be Accepted at Reliance General Insurance Through Yes Bank

Reliance General Insurance on Wednesday said it has become a forerunner general insurance company in the country to accept the Reserve Bank of India’s (RBI) Central Bank Digital Currency e-Rupee for premium payments.

The company has tied up with Yes Bank to facilitate the collection of premiums in the digital mode using the bank’s e-Rupee platform, a statement said.

Customers who have an active e-wallet with any bank can scan Reliance General Insurance’s e-Rupee QR code to make immediate payment, it said.

With this pioneering launch, the company is presenting its customers with an easy, safe, instant and green payment solution, and taking its promise of providing excellent customer experience to the next level.

e-Rupee is a digital token that is equivalent to a banknote i.e. legal tender, and is a sovereign currency backed by the RBI, it noted.

Being digital, e-Rupee removes all the issues of handling physical cash and offers the same anonymity as a banknote, it said.

Moreover, it said, since all e-Rupee transactions are done through an RBI-regulated entity, it reduces banknote-related risks like anti-money laundering, the counterfeit of currency etc.

Reliance General Insurance is enabling its customers to hedge such risks by providing e-Rupee as a form of digital currency transaction option thereby promoting safe financial transactions, it said. 

The pilot for the retail digital rupee was launched in Mumbai, New Delhi, Bengaluru and Bhubaneswar on December 1, 2022. The retail digital rupee project started in a closed user group with the participation of four leading lenders, including State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank. Later, it will be extended to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. The scope of the pilot may be expanded gradually to include more banks, users and locations as needed.

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Digital Rupee Trial Begins; Exponential Growth in UPI Payments Backs Optimism on India’s CBDC Pilot: Experts

India’s digital rupee CBDC, officially stepped into its retail trial period in four cities — New Delhi, Mumbai, Bengaluru, and Bhubaneswar, on Thursday, December 1. The State Bank of India, ICICI Bank, Yes Bank, and IDFC First bank are the lenders that are participating in these trials, and upon completion, will testify if the CBDC is efficient and robust to use for day-to-day purchases, expanding its usability. Industry experts in India have expressed optimism about the scope that the digital rupee has in terms of adoptability.

India recorded a tremendous growth, when UPI payments skyrocketed in numbers after PM Narendra Modi overnight demonetised banknotes for Rs. 500 and Rs. 1,000, shaking up the economy.

The quick adoption of UPI at the time, now appears to be fuelling the enthusiasm around the eventual roll out of India’s CBDC, said Srinivas Nidugondi, Chief Growth and Transformation Officer at telecom firm Comviva in conversation with Gadgets 360.

“The UPI transactions registered an increase of about 118 percent increase in volume and over 98 percent increase in value in the Q2 of 2022 as compared to Q2 2021. The blockchain technology has been a revolutionary innovation in recent times and India leveraging this for the digital rupee is yet another steppingstone for India to move digitising its economy,” Nidugondi said.

Built on blockchain, the digital rupee is a virtual representation of India’s fiat currency, that is not, in any way, linked to the crypto sector. Its first trial phase had kickstarted last month.

As part of its retail trials, the Reserve Bank of India (RBI) will be testing the CBDC with select merchants and customers. The CBDC will be given to the testers in a digital wallet, backed by the participating national banks.

“Transactions can be both Person to Person (P2P) and Person to Merchant (P2M). Payments to merchants can be made using QR codes displayed at merchant locations. The e₹-R would offer features of physical cash like trust, safety and settlement finality. As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks,” the RBI had said in an official statement last week.

The blockchain technology is most known for bringing transparency to whatever is built on it. Information and history contained on a blockchain network are irreversible, that record exact and transparent sequence of events.

Its implementation in India’s existing financial system will automatically increase the transparency issues that keeps the current systems away from complete user trust.

In the coming months, the RBI will be expanding its retail trials for the CBDC to other cities as well, Rachit Chawla, CEO of digital lending marketplace Finway FSC told Gadgets 360.

“The digital rupee is a commendable initiative for reducing transaction costs, enabling real-time account settlements, and expediting cross-border transactions. Later it would be operational in more cities such as Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla,” Chawla noted.

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RBI’s First Pilot for Retail Digital Rupee to Go Live on December 1, Will Work in Select Locations

The Reserve Bank of India (RBI) is expanding the use cases of its digital rupee CBDC. Starting December 1, the testing for the Indian CBDC for retail purposes will kickstart in select regions in the country. Built on blockchain, the digital rupee is a virtual representation of India’s fiat currency that is intended to speed-up digital transactions and add a safety layer to it as well. As part of its retail testing, the CBDC will be used by merchants as well as customers, handpicked under the RBI oversight.

As part of the trials, the CBDC will be given to the testers in a digital wallet, backed by national banks participating in these trials. The wallet will be compatible with smartphones, PCs, and tablets.

“Transactions can be both Person to Person (P2P) and Person to Merchant (P2M). Payments to merchants can be made using QR codes displayed at merchant locations. The e₹-R would offer features of physical cash like trust, safety and settlement finality. As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks,” the RBI said in an official statement.

CBDCs and cryptocurrencies are both built on blockchain, which is a type of a distributed ledger technology. The difference that distinguishes CBDCs is that they are issued and regulated by central banks. Cryptocurrencies on the other hand, are not controlled by central banks and are largely unregulated.

Earlier this month, RBI governor Shaktikanta Das called the launch of India’s CBDC pilot a landmark moment in the history of currency in the country.

In conversation with Gadgets 360, Alankar Saxena, the Chief Technical Officer and Co-Founder of Mudrex recently noted that this CBDC will help Indians move into a transparent cashless financial system.

Japan, Russia, Jamaica, and China are among other nations working on their respective CBDCs.

Around May, Jamaica rolled out its Jam-Dex CBDC and also announced incentives for the first 100,000 adopters.

Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks. The information provided in the article is not intended to be and does not constitute financial advice, trading advice or any other advice or recommendation of any sort offered or endorsed by NDTV. NDTV shall not be responsible for any loss arising from any investment based on any perceived recommendation, forecast or any other information contained in the article. 

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CBDC: RBI to Commence Pilot Launch of E-Rupee for Specific Use Cases

The Reserve Bank on Friday said it will soon commence the pilot launch of e-rupee for specific use cases with a view to bolstering India’s digital economy, making payment systems more efficient, and checking money laundering.

In a concept note on Central Bank Digital Currency, the RBI said CBDC is aimed to complement, rather than replace, current forms of money and is envisaged to provide an additional payment avenue to users, not to replace the existing payment systems.

“Supported by state-of-the-art payment systems of India that are affordable, accessible, convenient, efficient, safe and secure, the Digital Rupee system will further bolster India’s digital economy, make the monetary and payment systems more efficient and contribute to furthering financial inclusion,” the paper said.

CBDC is a digital form of currency notes issued by a central bank. While most central banks across the globe are exploring the issuance of CBDC, the key motivations for its issuance are specific to each country’s unique requirements.

The Government of India had announced the launch of the Digital Rupee — a Central Bank Digital Currency (CBDC) from fiscal year 2022-23 onwards in the Union Budget placed in Parliament on February 1, 2022.

The central bank said, “The Reserve Bank will soon commence pilot launches of e-rupee for specific use cases. As the extent and scope of such pilot launches expand, RBI will continue to communicate about the specific features and benefits of e-rupee, from time to time.” CBDC can be classified into two broad types — general purpose or retail (CBDC-R) and wholesale (CBDC-W). Retail CBDC would be potentially available for use by all and while wholesale CBDC is designed for restricted access to select financial institutions.

“For CBDC to play the role as a medium of exchange, it needs to incorporate all the features that physical currency represents including anonymity, universality, and finality,” the note said.

Across the globe, the note said more than 60 central banks have expressed interest in CBDC with a few implementations already under pilot across both Retail and Wholesale categories and many others are researching, testing, and/or launching their own CBDC framework.

The concept note presents the background, motivation, choices of design features and other policy frameworks for e-rupee system for the country.

The aim is to build an open, inclusive, interoperable and innovative CBDC system which will meet the aspirations of the modern digital economy of India, it said.

The paper also noted that the potential impact on monetary policy from an introduction of CBDC is still unclear and is purely speculative given that only limited CBDCs are currently in existence as few nations have issued till date.

After factoring in the concerns related to anonymity, appropriate analytics of big data generated from CBDC can assist in evidence-based policy making.

“It may also become a rich data source for service providers for financial product insights. Further, the data would be highly useful for enforcing money laundering regulations,” it said.

The purpose behind the issue of this concept note is to create awareness about CBDCs in general and the planned features of the digital rupee, in particular, the RBI said.

The note also seeks to explain Reserve Bank’s approach towards introduction of the digital Rupee.

Reserve Bank said it’s approach is governed by two basic considerations – to create a digital Rupee that is as close as possible to a paper currency and to manage the process of introducing digital rupee in a seamless manner.

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CBDCs Will Make Cross-Border Transactions Cost-Effect and Fast, Says RBI Deputy Governor

The Reserve Bank of India’s (RBI) Deputy Governor T Rabi Sankar has stated that the country’s upcoming Central Bank Digital Currency (CBDC) could be viewed as a tool that greatly reduces time and cost for cross-border transactions. Referring to the RBI’s ‘Digital Rupee’ project, which was announced in the Union Budget by Finance Minister Nirmala Sitharaman earlier this year as a possible solution to the problem, the RBI Deputy Governor remarked that although India has an efficient domestic payments system, cross-border payments remain fairly expensive.

Addressing the India Ideas Summit, an event hosted by the US-India Business Council India (USIBC), T Rabi Shankar said, “We have to understand that internationalisation of CBDC is crucial to addressing the payments issue that bodies like G-20 and Bank for International Settlements (BIS) are dealing with now.”

As per a PTI report, the RBI Deputy Governor spoke about India having an excellent, cheap and fast domestic payments system in contrast to a rather expensive cross-border payments system. There is a lot of scope for improvement in terms of both cost and speed, he noted.

CBDC is probably the most efficient solution to this problem, he said, adding, for example, if India’s CBDC and the US CBDC systems can talk to each other, we don’t have to wait for settling transactions.

“That massively takes out the settlement risk from cross border transaction that reduces time, that reduces cost. So, CBDC internationalisation is something that I’m looking forward to,” he said.

The comments from the Reserve Bank executive arrive on the back of a Moneycontrol report earlier this week that mentioned that the RBI has spoken to four public-sector banks — namely State Bank of India, Punjab National Bank, Union Bank of India, and Bank of Baroda — to run the CBDC pilot internally.

It added that the RBI is also reportedly consulting with several fintech companies on the Digital Rupee project in a bid to ensure minimal deployment snags. Among them is the US-based firm Fidelity National Information Services (FIS), which has been advising central banks on CBDC issues, such as offline and programmable payments, financial inclusion, and cross-border CBDC payments.

The RBI is planning to introduce India’s CBDC in stages during the current fiscal year that ends in March.

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India to Sync Upcoming CBDC With National Monetary Policies, Payment Systems

Indians are eagerly awaiting the launch of the Digital Rupee CBDC that is expected to be rolled-out for the current fiscal 2022-23. The Reserve Bank of India (RBI) has released a report stating that this CBDC will be in alignment with the country’s existing monetary policies as well as payment systems. The RBI, which will have a control on this Digital Rupee, aims to take a graded approach in accordance with the financial structure of India.

A Central Bank Digital Currency (CBDC) is a blockchain-based payments solution, regulated by the central bank. While it works like a typical cryptocurrency and facilitates instant, high value digital payments, transactions on CBDCs are traceable and monitored by the government.

“The Reserve Bank proposes to adopt a graded approach to introduction of CBDC, going step by step through stages of Proof of Concept, pilots and the launch. The design of CBDC needs to be in conformity with the stated objectives of monetary policy, financial stability and efficient operations of currency and payment systems,” RBI said in its report.

The development comes just some time after a senior RBI official reportedly claimed that the CBDC will be introduced separately for wholesale and retail sectors.

On several occasions, Nirmala Sitharaman, India’s finance minister, has noted that the Digital Rupee will expand payment options for Indians.

The government of India is also betting on the CBDC to expand its efforts for bringing-in financial inclusion for those who are still not a part of India’s banking systems. The work on Digital Rupee is underway and the government of India does not wish to rush through its development and roll-out processes.

In April, RBI Governor T Rabi Sankar had said that a nuanced and calibrated approach is essential for launch of India’s maiden digital currency as it would have various implications for the economy and monetary policy.

Several other nations like US, Russia, China, Jamaica, Nigeria, and Mexico are also working on their respective CBDCs.

Paolo Ardoino, the CTO of Tether, had recently said that the main role of CBDCs is to employ private blockchain as a state-of-the-art, cost-controlled technology infrastructure in which the majority of bank transfers and credit/ debit card transactions will be carried out.

According to the Atlantic Council’s CBDC tracker, 109 countries including India are currently in the process of developing their sovereign digital currency, a number that has doubled since May 2020.

Out of these 86 nations, nine countries have already launched their CBDC while 15 are in the pilot phase.

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