In 2023–2024, the Reserve Bank of India (RBI) plans to broaden the Central Bank Digital Currency (CBDC) pilot program and include a variety of use cases and functionalities.
Aim of e-Rupee expansion
“During 2023-24, the Reserve Bank of India (RBI) aims at expanding the ongoing pilots in CBDC-Retail and CBDC-Wholesale by incorporating various use cases and features,” the central bank stated in its annual report for 2022-2023.
In order to advance the digitization initiatives outlined in the Union Budget 2022–23, the Reserve Bank introduced its Central Bank Digital Currency (CBDC) in stages throughout the year, beginning with the launch of pilot programs for the Digital Rupee (e) in the wholesale and retail segments on November 1 and December 1, respectively, according to the RBI.
The ‘Concept Note’ on CBDC was released prior to the pilots in order to raise awareness of CBDCs in general and the anticipated characteristics of e’ in particular.
RBI, Digital Rupee CBDC is a type of electronic national currency. Two different variants of the Digital Rupee, known as CBDC-Wholesale (CBDC-W) and CBDC-Retail (CBDC-R), were suggested for issuance by the central bank. While CBDC Retail is accessible to everyone, including the private sector, non-financial consumers, and companies, CBDC-Wholesale is only for restricted access to a select few financial institutions.
On November 1, 2022, the wholesale Digital Rupee segment’s trial project began. The settlement of secondary market transactions in government securities (G-secs) is the use case for this pilot project.
On December 1, 2022, the CBDC-Retail pilot program’s first test was announced. While wholesale e-Rupee has no set denomination, retail e-Rupee has been introduced in denominations of 50 paise, 1, 2, 5, 10, 20, 50, 100, 200, 500, and 2000.
READ ALSO-Withdrawal of ₹2000 notes from circulation.
E-Rupee launch
According to the RBI, the e-Rupee can be retained or used to make purchases just like actual currency notes.
The central bank had earlier said that the two-tier concept will be used to distribute the retail Digital Rupee. While the bank would be in charge of distribution and payment services, the RBI will be responsible for issuing and redeeming e-Rupee.
Four banks, including the State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank, participated in the pilot initiative at its inception. Four other banks were later added: Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank.
Five other institutions are now in the process of joining the pilot, including Punjab National Bank, Canara Bank, Federal Bank, Axis Bank, and IndusInd Bank.
In order to facilitate use, customers and merchants joined to a closed user group (CUG) in Mumbai, New Delhi, Bengaluru, and Bhubaneswar where the retail e-Rupee trial was initially implemented.
Following then, other cities were included in the list, including Ahmedabad, Chandigarh, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.
