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Indian e-rupee to boost digital payments without bank accounts, say industry stakeholders

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A central bank digital currency (CBDC) could play a key role in providing access to digital payments without the need for a bank account and access would be facilitated by a central bank-issued digital wallet, industry stakeholders said.



The rollout of the e-rupee is one of the most wanted developments since its announcement in the Union’s budget for FY23.

jaya VaidhyanathanCEO of BCT Digital, said the RBIThe launch of the digital rupee pilot marks significant progress in the digital payments journey.

“The initiative started in the low-volume, high-value wholesale (interbank) segment, from which lessons would be used to roll out reliable, scale-built retail payments,” said Vaidhyanathan.

The pilot announcement involves nine banks, including the SBI, the Bank of Baroda, the HDFC Bank, the Yes Bank, the Kotak Mahindra Bank and the ICICI Bank, which settle secondary market transactions in government securities, reducing settlement risk and transaction costs.

“A successful pilot and by extension a full rollout of the digital rupee is expected to extend the reach of the payment and financial needs of a wider category of users while ensuring transparency and low operational costs, and in this regard it is encouraging to to see the RBI’s support for innovation in creating a future-proof, world-class digital ecosystem,” Vaidhyanathan emphasized.

India has one of the most technologically advanced currencies in the world, and the e-rupee will put it at the forefront of true digital payments and improve financial inclusion.

“The popularity of a digital rupee, backed by the RBI, will help give legitimacy to other private digital currencies such as crypto. While we await clarity on how it will be implemented, it is a positive step towards digital adoption.” currency,” said Prashant KumaraFounder and CEO at weTrade.

According to Arjun Khazanchi, co-founder and Chief Legal and Strategy Officer at Rooba.Finance, the CBDC is an ambitious project in which the government has quietly worked to disrupt the financial system that has historically been opaque, cash dependent and highly inefficient. .

“The first use case will be for the secondary market trades in government securities. This move can actually increase liquidity, remove inefficient and redundant processes while reducing transaction costs. This would also allow for greater transparency between participants,” Khazanchi argued. .

By doing so, the government also expects to be able to reduce settlement risk, which is one of the biggest use cases for Blockchain in financial markets.

There are some fears regarding the privacy and overt control the government could have over the CBDCs.

“However, some comments may be exaggerated and their intent is presumed. Retail CBDC is still a long way off and would require a lot of education and technical training before being imposed,” Khazanchi said.

The CBDCs can help maintain the role of public approval in monetary policy and safeguard the role of central banks in protecting financial stability in their markets. It offers a public, digital alternative to cash and private digital money.

according to Manish SharmaFounding Partner of Centricity Wealth Tech, the CBDCs can play a key role in providing access to digital payments without the need for a bank account.

“Public-private partnerships will be essential to the success of a CBDC launch, enabling central banks to leverage existing infrastructure and customer relationships. Such alliances will help central banks implement use cases tailored to the needs of end users, and fill their gaps in capabilities and knowledge of consumption habits, especially in a retail scenario,” Sharma said.

By involving commercial banks and other private stakeholders (technology enablers, traders, users) in the launch process, central banks will also promote a broader sense of ownership, manage fears of displacement and increase the likelihood of successful adoption.

Mahesh Shukla, CEO and founder of PayMe India, said the RBI is further looking forward to focusing on other wholesale transactions and cross-border payments, which could be projected as steps to facilitate ways of financing for the general public.

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