The next phase of digital rupee will be launched soon, CNBC Aawaz reported. Four more banks including HDFC Bank, Union Bank Of India, Kotak Mahindra Bank and Bank of Baroda will be involved in this. This facility will be available in 8 cities including Ahmedabad, Indore and Patna. With lessons learnt from the first phase, some changes are also expected in next phase, CNBC Aawaz report said.
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The Central Bank Digital Currency - Digital Rupee - has received a good response so far. About 16,000 people have used it since December 1 and a total of 1,60,000 transactions have been done through digital rupee.
In the next phase, Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Patna and Shimla will be covered. So far, only 4 cities – Mumbai, Delhi, Bangalore and Bhubaneswar have been included.
What exactly is a CBDC?
CBDC is a digital form of currency notes issued by a central bank. While most central banks across the globe are exploring the issuance of CBDC, the key motivations for its issuance are specific to each country's unique requirements.
India announced the launch of the Digital Rupee from the fiscal year 2022-23 onwards in the Union Budget tabled in Parliament on February 1, 2022.
According to the RBI website, CBDC is the same as currency issued by a central bank but takes a different form than paper (or polymer). It is a sovereign currency in an electronic form and will appear as a liability (currency in circulation) on a central bank's balance sheet.
CBDCs should be exchangeable at par with cash.
How can it be issued?
It can be issued in the same denominations that paper currency and coins are currently issued and distributed through intermediaries such as banks. Users can transact with e-rupee through a digital wallet the participating banks offer and store on mobile phones or devices.
What are the key advantages?
According to the RBI, payments using CBDCs will be final and thus reduce settlement risk in the financial system. CBDC will eliminate the need for interbank settlement. It can be compared to a UPI system where CBDC is transacted instead of bank balances as if cash is handed over.
First Published: Jan 9, 2023 4:51 PM IST
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