RBI launches retail digital rupee in four cities; here’s everything you need to know | News Bharat

(PTI) The Reserve Bank of India (RBI) on Thursday launched the first retail digital rupee pilot project in Mumbai, New Delhi, Bengaluru and Bhubaneswar.

Retail Digital Rupee (e ¥-R) The project has been launched in a closed user group with the participation of four lenders – State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank – along with customers and merchants.

The launch comes a month after the Reserve Bank of India (RBI) started a wholesale digital rupee pilot on November 1.

Nine more cities and four banks will be included in the second phase of the retail digital rupee project.

electronic ¥According to the RBI, -R is a form of digital token representing fiat currency that will provide “the characteristics of physical cash such as trust, security and settlement finality.”

“Like cash, it does not accrue any interest and can be converted into other forms of money, such as bank deposits,” the central bank said in announcing the pilot project on Nov. 29.

The use of a digital rupee is also expected to reduce operational costs associated with the management of physical currencies and increase financial inclusion in the economy.

In a press release on Thursday, Yes Bank said it launched RBI’s CBDC (central bank digital currency) for its closed user base, which includes retail customers and merchants.

It added that during the pilot phase, access to the Yes Bank Digital Rupee app will be provided to the bank’s selected retail customers who will be part of a closed user group.

A CBDC is a digital form of paper money issued by a central bank. While most central banks around the world are exploring the issuance of CBDCs, the main motivations for their issuance vary according to each country’s unique requirements.

As per the requirements of the banks, the RBI will create digital rupees using latest technology and issue digital rupees to banks in a secure manner.

Customers will be able to make digital rupee requests through the digital wallet in the mobile application provided by the bank, and the requested amount will be credited to their digital rupee wallet.

Users will be able to transact with e ¥-R Digital wallet provided by participating banks and stored on the phone/device.

Transactions can be person-to-person (P2P) and person-to-merchant (P2M). Payments to merchants can be made using the QR code displayed at the merchant’s location.

Eight banks have been identified to participate in the pilot project in phases.

After State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank, four more banks — Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank — will join the pilot project.

The other nine cities that the pilot will later expand to are Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Cochin, Lucknow, Patna and Shimla.

The scope of the pilot program may be progressively expanded as needed to include more banks, users and locations, as per RBI rules.

Last month, the RBI said the digital rupee-wholesale would reduce transaction costs by pre-eliminating the need for settlement guarantee infrastructure or collateral to reduce settlement risk.

The central government announced the rollout of the digital rupee starting from the 2022-23 fiscal year in the Union Budget tabled in Parliament on February 1, 2022.

In a recent concept note, the RBI said CBDCs are intended to complement rather than replace current forms of money and envision providing users with additional payment avenues rather than replacing existing payment systems.

Globally, more than 60 central banks have expressed interest in CBDC, some implementations are already being piloted in the retail and wholesale categories, and many other central banks are researching, testing and/or launching their own CBDC frameworks.


These are the terms to understand cryptocurrencies.

First published: December 2, 2022 at 08:36 AM IT department

Source link