The Central Bank Digital Currency (CBDC) or Digital Rupee of the Reserve Bank of India commenced on 1 November 2022
The Reserve Bank of India (RBI) has announced that the Central Bank Digital Currency (CBDC) or Digital Rupee has been launched. RBI says that it aims to create awareness about CBDCs in general and the planned features of the Digital Rupee (e₹), in particular. It explains the objectives, choices, benefits, and risks of issuing a CBDC in India, said RBI in a press release. The Reserve Bank will soon also commence pilot launches of e₹ for specific use cases.
CBDC or digital rupee is basically a form of a digital currency that will be issued by a central bank. The digital rupee will provide an additional option to the currently available forms of money. “It is substantially not different from banknotes, but being digital it is likely to be easier, faster and cheaper. It also has all the transactional benefits of other forms of digital money,” said RBI.
Usage of Technology and Data Analytics
The Reserve Bank says that the concept note will help generate a large amount of data in real-time, which in turn will help in policy making. “The CBDC platform is expected to generate huge sets of data in real time. After factoring in the concerns related to anonymity, appropriate analytics of Big Data generated from CBDC can assist in evidence-based policy making. It may also become a rich data source for service providers for financial product insights,” says RBI. Apart from that, the Central Bank also hopes that the generated data would also be useful for enforcing money laundering regulations.
Nine Banks that are Part of the Digital Rupee Initiative
RBI has identified nine banks for participation in the Digital Rupee’s wholesale pilot project which are as follows:
- State Bank of India.
- Bank of Baroda.
- Union Bank of India.
- HDFC Bank.
- ICICI Bank.
- Kotak Mahindra Bank.
- Yes Bank.
- IDFC First Bank.
RBI said the first pilot of the Digital Rupee in the retail segment is planned for launch within a month in select locations. It said Digital Rupee in retail segment will be commenced in closed user groups comprising customers and merchants.