No intermediation of bank in CBDC: RBI

In case of digital rupee transactions, it goes from one’s mobile phone to somebody else’s mobile.

Published: 08th December 2022 07:39 AM  |   Last Updated: 08th December 2022 07:39 AM   |  A+A-

Reserve Bank of India headquarters in Mumbai, RBI

Image used for representation.(File Photo | PTI)

By Express News Service

BENGALURU:  The Reserve Bank of India (RBI), which launched the pilot for retail digital Rupee (e-R) on December 1, on Wednesday, clarified that there is no intermediation of bank in the Central Bank Digital Currency (CBDC) unlike UPI, and that there is no difference in the treatment between paper currency and digital currency.

Speaking to media, at the post-policy meet, RBI Governor Shaktikanta Das said, “Any UPI transaction involves the intermediation of digital rupee), you will draw the digital currency and keep it in your wallet which will be basically your mobile phone and when you go and make a payment in a shop or to another individual, it will move from your wallet to his wallet. There is no routing or there is no intermediation of the bank.”

In case of digital rupee transactions, it goes from one’s mobile phone to somebody else’s mobile. “So why should we create this kind of fear psychosis? There is a law of the land and these are early days, the pilot on retail has just started,” Das said, as he was addressing on privacy concerns with regard to digital rupee.
Deputy governor T Rabi Sankar said the base system would be set up and then the private sector can innovate.

Das also said that the amendment in the RBI act with regard to the CBDC says currency will also include digital currency. “There is no difference in the eyes of the law between paper currency and digital currency.” With regard to the wholesale CBDC pilot, Das said it has been satisfactory.

The central bank said it will introduce single-block-and-multiple-debits (SBMD) functionality in the UPI. With this, customers can block funds in their accounts for specific purposes and the amount will be debited whenever needed.

Currently, there is only SBMD transactions functionality in UPI. “SBMD allows users and merchants to decide on a certain limit to which a credit card may be authorised, making it convenient for customers and giving confidence to merchants,” said Krishnan Vishwanathan, founder and ED, RING. Das also said the scope of Bharat Bill Payment System (BBPS) is being enhanced to include all categories of payments and collections, both recurring and non-recurring, and for all categories of billers (businesses and individuals).


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