The Reserve Bank of India (RBI), in its annual report 2022-23, said that in FY24 it wants to expand the ongoing pilot of the Central Bank Digital Currency (CBDC) and incorporate various use cases and features in 2023-24.
In its annual report, which was released on Tuesday, it said: "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."
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The report said: “Taking forward digitisation efforts announced in the Union Budget 2022-23, the Reserve Bank introduced its Central Bank Digital Currency (CBDC) in phases during the year, with the launch of pilots for Digital Rupee (e`) in the wholesale and retail segments on November 1, 2022, and December 1, 2022, respectively."
“The pilots were preceded by the issuance of a ‘Concept Note’ on CBDC to create awareness about CBDCs in general and the planned features of e` in particular," the annual report added.
In 2022, the RBI floated the digital Rupee, which is India’s very own CBDC, and an electronic form of sovereign currency. Initially, the central bank proposed to issue two versions of the Digital Rupee, i.e., CBDC-Wholesale (CBDC-W) and CBDC-Retail (CBDC-R).
CBDC-Wholesale is for restricted access to select financial institutions while CBDC-Retail can be used by all including the private sector, non-financial consumers, and businesses.
The pilot programme of the wholesale Digital Rupee segment started on November 1, 2022. The use case for this pilot is the settlement of secondary market transactions in government securities (G-secs).
The first pilot for CBDC-Retail was announced on December 1, 2022. The retail e-Rupee has been launched in denominations of 50 paise, 1, 2, 5, 10, 20, 50, 100, 200, 500, and 2000, while wholesale e-Rupee does not envisage any denomination, the annual report said.
In the initial phase, customers were asked to transact using the digital rupee through a digital wallet offered by the participating banks in the pilot programme. The digital wallet can be saved on an Android smartphone.
E-Rupee rollout
The RBI said e-Rupee can be held or used to carry out transactions, similar to how currency notes can be used in physical form.
The central bank had initially said that the retail Digital Rupee will be distributed through the two-tier model. The RBI will issue and redeem e-Rupee while the distribution and payment services will be delegated to the bank.
The pilot project started with four banks including State Bank of India, ICICI Bank, Yes Bank, and IDFC First Bank. Later on, four other banks -- Bank of Baroda, Union Bank of India, HDFC Bank, and Kotak Mahindra Bank – were added.
At present, five more banks, including Punjab National Bank, Canara Bank, Federal Bank, Axis Bank, and IndusInd Bank, are in the process of joining the pilot.
The pilot of the retail e-Rupee was first introduced in Mumbai, New Delhi, Bengaluru, and Bhubaneswar, where customers and merchants were added to a closed user group (CUG) for its easy usage.
Afterward more locations were added to the list, like Ahmedabad, Chandigarh, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla.
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