India’s digital rupee CBDC, officially comes into its retail trial period in four cities, New Delhi, Mumbai, Bengaluru, and Bhubaneswar, on 1st December 2022. The State Bank of India, ICICI Bank, Yes Bank, and IDFC First bank are the lenders that are participating in these trials, and upon completion, will testify if the CBDC is efficient and robust to use for day-to-day purchases, expanding its usability.
Industry experts in India have express optimism about the scope that the digital rupee has in terms of adoptability.
India record a tremendous growth, when UPI payments high in numbers after PM Narendra Modi overnight demonetise banknotes for Rs. 500 and Rs. 1,000.
The quick adoption of UPI at the time, now appears to be fuelling around the eventual roll out of India’s CBDC, said Srinivas Nidugondi, Chief Growth and Transformation Officer.
Srinivas Nidugondi Said :
Built on blockchain, the digital rupee is a virtual representation of India’s fiat currency, that is not, in any way, link to the crypto sector.
Its first trial phase had kickstarted last month.
As part of its retail trials, the Reserve Bank of India (RBI) will be testing the CBDC with select merchants and customers.
The CBDC will be given to the testers in a digital wallet, back by the participating national banks.
Reserve Bank of India (RBI) said in an official statement :
The blockchain technology is most known for bringing transparency to whatever is built on it.
Information and history contain on a blockchain network are irreversible, that record exact and transparent sequence of events.
Its implementation in India’s existing financial system will automatically increase the transparency issues that keeps the current systems away from complete user trust.
What is a Digital Rupee?
The full details of the functioning of the digital Rupee remain unclear at the moment, but the RBI explains that the e-Rupee will be available in the form of a digital token that represents legal tender.
It would be issue in the same denominations that paper currency and coins are currently issue, and distribute through intermediaries such as banks. E-Rupee will essentially allow users to store in a digital wallet offer by the participating banks.
It will be store on mobiles so that users can easily access it at the time of the transaction.
The digital rupee could be use for Person to Person (P2P) and Person to Merchant (P2M) transactions.
Payments to merchants can be made using QR codes display at merchant locations.
RBI explains that the e-Rupee would offer features of physical cash like trust, safety and settlement finality.
Also its value will remain the same and not be volatile as a cryptocurrency.
In a release, RBI said :
How is Digital Rupee different from UPI?
From 2016, the Indian government has promoting the adoption of digital payments across India.
UPI technology by the National Payments Corporation of India heavily promotes cashless payments in India, so it has its own quirks.
For example, users have to create an account and back it up with their savings account.
The Digital Rupee, also known as the Central Bank Digital Currency, will let users transact like physical cash but in a digital form.
On paper, it means users can transact without any bank involve, though the exact functionality will be clarified once the testing begins.
While, cryptocurrencies, like Bitcoins aren’t recognise as legal tender and they have back by a Blockchain technology.