Kotak Mahindra Bank Limited (KMBL) has announced the implementation of the first phase of the Central Bank Digital Currency (CBDC), referred to as the “Digital Rupee” (e₹).
- The “Digital Rupee” (e₹) is a legal tender equivalent to bank notes and coins but issued in a digital form by the Reserve Bank of India (RBI).
The RBI has shortlisted KMBL as one of eight banks to implement a pilot project for the issuance of e-currencies.
- KMBL launched the CBDC to a Closed User Group (CUG) of customers, including retail customers and businesses.
Key Points:
i.The Digital Rupee pilot will be launched by KMBL in Mumbai (Maharashtra), Delhi, and Ahmedabad (Gujarat).
ii.An email or SMS invite to download the Digital Rupee app will be delivered to a select group of KMBL customers.
iii.The digital rupee wallet, which will be available for download on Android operating system (OS) smartphones, functions in the same way as a physical wallet.
Background
i.After introducing and testing wholesale CBDC (e ₹-W) in November 2022, the RBI launched a pilot for the digital rupee in the retail segment (e ₹-R) with four banks in four cities on December 1, 2022.
- It was initially limited to four cities, including Mumbai, New Delhi, Bengaluru (Karnataka), and Bhubaneswar (Odisha), but was subsequently extended to nine more cities.
ii.The RBI has shortlisted eight banks to participate in the retail pilot project in phases.
- The first phase featured four banks: The State Bank of India (SBI), ICICI Bank, Yes Bank, and IDFC First Bank.
- The other four banks chosen for subsequent participation in the retail pilot were Bank of Baroda (BoB), Union Bank of India (UBI), HDFC Bank, and Kotak Mahindra Bank Limited (KMBL).
iii.The digital currency will be issued in the same denominations and distributed through financial intermediaries as part of the pilot.
- Users will be able to transact through a digital wallet offered by participating banks.
Reliance Retail Becomes First Retailer to Begin Accepting Digital Rupee for Sales
Reliance Retail has become the first organized retail chain in India to accept the RBI-created and blockchain-based CBDC [e₹] payments at its gourmet food store, Freshpik.
- All Reliance Retail outlets in India will gradually accept digital rupee payments.
The CBDC is a digital version of fiat money that will coexist with actual cash.
Background
Innoviti Technologies, a payments-focused financial-tech firm, announced the launch of in-store payments via digital rupee in the retail segment (e ₹-R) in collaboration with Reliance Retail, ICICI Bank, and KMBL.
Key Points:
i.The solution was designed by Innoviti Technologies, a technology partner of Reliance Retail, employing cutting-edge technology that integrates with the cashier billing system.
ii.Customers using the Digital Rupee app from ICICI Bank or KMBL will need to scan the QR code on the terminal and enter their password to authorize payment through e ₹-R.
Advantages of CBDC
i.A CBDC can play an important role in facilitating access to digital payments without the need for a bank account, with access facilitated via a central bank-issued digital wallet.
ii.The adoption of e-rupee is projected to improve the efficiency of the interbank market.
iii.Settlement in central bank money would lower transaction costs by eliminating the need for settlement guarantee infrastructure or collateral to minimize settlement risk.
Recent Related News:
i.In December 2022, Reliance Consumer Products, a subsidiary of Reliance Retail Ventures Ltd (RRVL), launched its made-for-India Fast-Moving Consumer Goods (FMCG) brand “Independence” in Gujarat.
- The company will provide a selection of goods under the “Independence” brand in a number of categories, including staples, processed foods, and other daily essentials.
ii.RRVL, a subsidiary of Reliance Industries Limited (RIL) is the holding company of Reliance Retail Limited which operates the retail business.
About Kotak Mahindra Bank Limited (KMBL):
MD & CEO – Uday Kotak
Established – 2003
Headquarters – Mumbai, Maharashtra
Tagline – Let’s Make Money Simple
