The central bank digital currency (CBDC) pilot project in the retail sector went live on Thursday, with the Reserve Bank of India (RBI) issuing Rs 1.71 crore to it under contracts with four participating banks.
The central bank has identified four banks – State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank – in four cities – Mumbai, New Delhi, Bengaluru and Bhubaneswar – for the first phase of the pilot. The highest indent was received from a private sector bank.
While the pilot started with a Rs 1.71 crore digital currency, the bank’s token indentation and issuance will continue to evolve dynamically based on user demand and the bank’s liquidity requirements, the sources said. As demand from banks increases in the coming days, the central bank will create more digital rupees.
“There have been transactions between friends, customers have done transactions with merchants large and small,” said a banker. Merchants include street fruit vendors and large merchants, with popular merchants such as food delivery apps also set to open in the future, the source said. Accept digital rupees for a few days.
The goal is to engage 50,000 merchants and customers in the next few days.
Four other banks — Baroda Bank, Union Bank of India, HDFC Bank and Kotak Mahindra Bank — will join the pilot, which will later be extended to Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla. The next four banks will join the pilot over the next 2-3 weeks.
Yes Bank, which is involved in the first phase, said that during the pilot phase, access to the Yes Bank Digital Rupee app will be granted to selected retail customers who will be part of a closed user group.
“The digital rupee wallet will be like a physical wallet but in digital form and can be downloaded on smartphones with the Android operating system…payments to merchants can be made through unique QR codes displayed at various merchant touchpoints,” the lender said .
These currencies are digitally issued to banks and customers will be able to request digital rupees through their digital wallets in the mobile application provided by their banks, with the requested amount credited to their digital rupee wallets. Customers can pay digital rupees to individuals and their merchants.
The RBI said the retail pilot is in a closed user group and will take the form of digital tokens representing fiat currencies. The digital rupee will be issued in the same denomination as banknotes and coins.
Sandeep Ghosh said: “In addition to reducing the operational costs associated with physical cash management, it will increase settlement efficiency and stimulate innovation in cross-border payments, and provide the public with the same use as any private virtual currency without the associated Risk.” Visa India and South Asia Group Country Manager. He added that Visa looks forward to working with RBI and industry partners to drive adoption of e-Rupee in India.
To be precise, a month ago, on November 1, the Reserve Bank of India launched a CBDC pilot – wholesale and trade government bonds in the secondary market.
According to data provided by the Clearing Corporation of India (CCIL), the average daily trading volume of CBDC bonds in the first week was Rs 2,875 crore.