Technology

Digital Rupee CBDC Trial Begins in India: Here’s What the Experts Are Saying

India’s digital rupee CBDC, officially stepped into its retail trial period in four cities — New Delhi, Mumbai, Bengaluru, and Bhubaneswar, on Thursday, December 1. 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 expressed optimism about the scope that the digital rupee has in terms of adoptability.

India recorded a tremendous growth, when UPI payments skyrocketed in numbers after PM Narendra Modi overnight demonetised banknotes for Rs. 500 and Rs. 1,000, shaking up the economy.

The quick adoption of UPI at the time, now appears to be fueling the enthusiasm around the eventual roll out of India’s CBDC, said Srinivas Nidugondi, Chief Growth and Transformation Officer at telecom firm Comviva in conversation with Gadgets 360.

“The UPI transactions registered an increase of about 118 percent increase in volume and over 98 percent increase in value in the Q2 of 2022 as compared to Q2 2021. The blockchain technology has been a revolutionary innovation in recent times and India is leveraging this for the digital rupee is yet another steppingstone for India to move digitizing its economy,” Nidugondi said.

Built on blockchain, the digital rupee is a virtual representation of India’s fiat currency, that is not, in any way, linked to the crypto sector. Its first trial phase was 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, backed by the participating national banks.

“Transactions can be both Person to Person (P2P) and Person to Merchant (P2M). Payments to merchants can be made using QR codes displayed at merchant locations. The e₹-R would offer features of physical cash like trust, safety and settlement finality. As in the case of cash, it will not earn any interest and can be converted to other forms of money, like deposits with banks,” the RBI had said in an official statement last week.

The blockchain technology is most known for bringing transparency to whatever is built on it. Information and history contained on a blockchain network are irreversible, that record the 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.

In the coming months, the RBI will be expanding its retail trials for the CBDC to other cities as well, Rachit Chawla, CEO of digital lending marketplace Finway FSC told Gadgets 360.

“The digital rupee is a commendable initiative for reducing transaction costs, enabling real-time account settlements, and expediting cross-border transactions. Later it would be operational in more cities such as Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna, and Shimla,” Chawla noted.


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Dinesh Guna

Dinesh Guna is a senior journalist for the last 3 years with Youthistaan. Prior to joining Youthistaan, He was working for news18. Special interest in Politics, Crime, Entertainment and Technology news. Twitter : gdinesh111
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