In October, the Reserve Bank of India (RBI) revealed its plan to launch its Central Bank digital currency (CBDC). On November 1, the Central Bank started the wholesale (CBDC-W) segment pilot program and in a recent media interaction has revealed plans for a retail (CBDC-R) pilot.
The Central Bank informed a local media house that it is carrying out preparations to start with the pilot of the retail segment and is expecting to launch within a month. It has named nine banks- State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, YES Bank, IDFC First Bank, and HSBC Bank to participate alongside in the pilot program.
Sources reveal that the Central Bank is in the final stage of preparing the rollout of the retail digital rupee pilot and will include all the banks at some point in its pilot. Every bank that is a participant in pilot programming is bound to test the digital rupee on a user base ranging from 10,000 to 50,000.
To ensure efficient implementation of the new payment method, the banks would have to collaborate with additional platforms like PayNearby and Bankit platforms.
PayNearby is a platform for retailers to become a part of the digital India initiative as business correspondents of banks and increase their income by providing financial services to their regular customers. Bankit enables customers to avail themselves of hassle-free, secure, and biometric authenticated services like cash withdrawal, balance inquiry, and mini statements through their Aadhaar-linked bank accounts.
The National Payments Corporation of India (NPCI) holds authoritarian rights to the CBDC infrastructure. NPCI is an umbrella organization for operating retail payments and settlement systems in India
Sources suggest that customers and merchants will be required to download specific wallets for digital rupee transactions; however, the Central Bank would fully integrate with the existing digital banking services. Additionally, the digital rupee is counted to be a supplement to the present payment mechanism.
Reportedly, the retail CBDC can be used by all including the private sector, non-financial consumers, and businesses while the wholesale CBDC is designed for restricted access to select financial institutions. Also, no announcements regarding the completion of the successful pilot of the wholesale segment have been made public by the bank.
CBDCs have become a relatively familiar concept with a lot of countries and Central Banks enthusiastic towards its adoption like Zimbabwe, Thailand, Australia, etc.