Reserve Bank Of India Set To Debut Retail CBDC Pilot Next Month
- India has entered final stages of preparing for a CBDC rollout and will witness the pilot of its retail central bank digital currency (CBDC), called the “digital rupee” next month in December 2022.
- The participants of the pilot project are the State Bank of India, Bank of Baroda, ICICI Bank, Union Bank of India, HDFC Bank, Kotak Mahindra Bank, Yes Bank, and IDFC First Bank.
- The banks participating in the pilot of the Indian CBDC have partnered with last-mile payment service providers, including PayNearby and Bankit and will enable merchants to pay via the digital rupee.
In an attempt to establish itself as a prominent figure among the biggest economies around the world, India will witness the pilot of its retail central bank digital currency (CBDC), which has been named the “digital rupee,” and the pilot is set to begin next month in December 2022. Interestingly, other leading economies around the world are also testing and discussing their own pilots as well.
As per a report from the Economic Times, the central bank of India has entered the final stages of preparing the rollout of the retail digital rupee pilot, and the participants of the pilot are the State Bank of India, Bank of Baroda, ICICI Bank, Union Bank of India, HDFC Bank, Kotak Mahindra Bank, Yes Bank, and IDFC First Bank.
Moreover, the report also revealed that the pilot is going to include all the commercial banks that are currently operating in the country. The National Payments Corporation of India (NPCI) will be hosting the CBDC platform and it will be similar to the instant real-time payment system formed by NPCI, the unified payments interface (UPI) system.
UPI payments have become a huge success in India, which is the world’s second-largest internet market. Payments are made using UPI addresses, which are connected directly to the bank accounts of the users, and as a result, instant money transfers are made up to a certain daily limit.
The report stated that the task of the digital rupee is not to replace the current widely used payment systems but is being built to compliment these systems. The retail CBCD will be interoperable with other payment systems as well and will work in a similar fashion as UPI does.
“Just like we have a common library for UPI, the technology for CBDC is similar to that, and it is being hosted by NPCI, it will be interoperable with the current payment platforms. The e-rupee will be stored in a wallet, the denominations will be available as per the customer’s request, just like you request cash from an ATM. Banks are launching this only in select cities,” an anonymous source told Economic Times of India.
The Reserve Bank of India wants each bank participating in the pilot to test the retail CBDC among 10,000 to 50,000 users and gradually, the entire pilot will be expanded to all the banks and the entire banking system of the Southeast Asian nation.
The banks participating in the pilot of the Indian CBDC have partnered with last-mile payment service providers, including PayNearby and Bankit, and will enable merchants to accept payments via the digital rupee.
Interestingly, the retail CBDC of India will be provided as a standalone product in the initial phase and the final version will be integration with existing mobile and internet banking services.