India’s Digital Rupee Expands: Non-Banks to Offer Central Bank Digital Currency Wallets

April 6, 2024 Bitcoin.com

Digital rupee gets big usability boost through Yes Bank integration with UPI

September 1, 2023 Coin Telegraph

CBDC

Yes Bank’s app UPI integration is the first for the Indian retail CBDC, which has seen a variety of projects since its pilot launch since December.

The Reserve Bank of India (RBI) central bank digital currency (CBDC), the digital rupee, will have enhanced usability, Yes Bank announced Aug. 30. This was thanks to Yes Bank’s integration of the Unified Payments Interface (UPI) with the RBI digital rupee app. Now Yes Bank account holders will be able to make transactions with the digital rupee by scanning UPI QR codes.

The UPI is a national payment portal operated by the National Payments Corporation of India (NPCI), a division of the RBI. The NPCI provides the infrastructure for both the UPI and the digital rupee. The UPI is used by 150 million merchants in India, according to local press reports.

We are pleased to share that YES BANK has gone live with Unified Payments Interface (UPI) interoperability on the Reserve Bank of India (RBI) Central Bank Digital Currency (CBDC) app.

With this, users can simply scan any UPI enabled QR Code through the YES BANK Digital Rupee… pic.twitter.com/dXxrerptoC
— YES BANK (@YESBANK) August 30, 2023

The Yes Bank app marks the first integration of the UPI with the CBDC. Yes Bank executive Ajay Rajan said in a statement:

“The transition to an interoperable CBDC platform holds the promise of seamless, efficient, and broader transactional capabilities for YES BANK customers. […] This transformational enabler will facilitate a quantum leap in CBDC usage, driven by the enhanced convenience and accessibility.”

Yes Bank was one of the eight original participating banks in the retail digital rupee pilot project, which launched in December. The project enlisted 5,000 participating merchants and 50,000 CBDC users and had carried out 800,000 transactions worth $134 million by February. A separate wholesale digital rupee pilot was launched in November.

The digital rupee is already accepted at some of the stores in the country's large Reliance Retail chain through a program using QR codes that began in February in conjunction with ICICI Bank, Kotak Mahindra Bank and Innoviti Technologies.

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India proposes AI-powered conversational payments system: RBI

August 10, 2023 Coin Telegraph

Coin Telegraph

India’s central bank said that there’s a potential for an AI system that would initiate transactions through a conversation.

The Reserve Bank of India (RBI), the country’s central bank, has published a press release that floated the idea of using artificial intelligence (AI) on conversational payments in the unified payments interface (UPI), which is an instant payment system developed in India.

Very Big Developments on UPI by RBI

• NFC (Tap & Pay) Based Payments with UPI

• UPI Conversational Payments using AI

• UPI Lite Limit Raised from ₹200 to ₹500

India is Probably Witnessing the Biggest Revolution in FinTech & Digital Payments
— Ravisutanjani (@Ravisutanjani) August 10, 2023

On Aug. 10, the RBI recognized that UPI has transformed digital payments in India, citing its ease of usage, safety and security. The central bank also noted that adding new features allowed the platform to cater to the diverse needs of the country’s economy. As technology progresses further, the RBI said that there’s a potential in developing an AI-powered system that will initiate and complete transactions through a conversation. The RBI wrote:

“As artificial intelligence (AI) is becoming increasingly integrated into the digital economy, conversational instructions hold immense potential in enhancing ease of use, and consequently reach, of the UPI system.”

According to the announcement, the system will be made available in smartphones and feature phone-based UPI channels. The RBI believes that this will help deepen digital penetration within the country.

As for its language support, it will initially be available in Hindi and English and will be updated to include support for more Indian languages in the future.

While AI definitely has massive potential for good, it can also bring many risks and challenges along with it. On Aug. 9, Binance CEO Changpeng Zhao pointed out how AI is starting to create risks from a “video verification” perspective after seeing the quality of an AI-powered avatar that’s very similar to a real person.

Similarly, the music industry has shown that AI-generated voices can sound the same as popular musicians. Because of this, Universal Music Group and Google have reportedly started talks about licensing melodies and vocal tracks of artists to be used in AI-generated songs.

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RBI lists risks of stablecoin for developing economies, calls for global regulation

June 28, 2023 Coin Telegraph

Central Bank

The Reserve Bank of India listed six specific ways stablecoin can undermine emerging markets, adding to its mounting case against crypto.

Stablecoin has a lot of potential to harm emerging markets and developing economies, the Reserve Bank of India (RBI) claimed in its latest Financial Stability Report, released June 28. The report listed six threats that stablecoin presents.

The RBI has been a steadfast critic of cryptocurrency, but it was particularly articulate about the problems it sees with stablecoin “from an EMDE [emerging markets and developing economies] perspective.” It listed six specific problems, even though:

“The lack of authenticated data and inherent data gaps in the crypto ecosystem impede a proper assessment of financial stability risks.”

A stablecoin could threaten an EMDE through currency substitution, as its underlying assets are generally denominated freely convertible foreign currency, the report claimed. The “cryptoisation” of the economy that could result from large-scale stablecoin adoption could lead to currency mismatches “on the balance sheets of banks, firms, and households.”

News Alert | RBI Financial Stability Report: Governor Shaktikanta Das on importance of tech, opportunities for growth and global cooperation among regulators #RBIFinancialStabilityReport #RBI @RBI @DasShaktikanta pic.twitter.com/D5dwkYcjwn
— ET NOW (@ETNOWlive) June 28, 2023

An EMDE central bank could face problems setting the domestic interest rate and liquidity condition due to the presence of stablecoin in the economy, the RBI continued. Furthermore, the “decentralised, borderless, and pseudonymous characteristics of crypto-assets […] make them potentially attractive instruments to circumvent capital flow management measures.”

By presenting an alternative to the domestic financial system, stablecoin could interfere with banks’ ability to mobilize money and create credit by undermining credit risk assessment. Finally, the report said, peer-to-peer transactions are hard to track, which could increase the potential for their use in wrongdoing.

The RBI took the opportunity to repeat its call for global coordination. It said:

“A globally coordinated approach is warranted to analyse risks posed to EMDEs vis- à-vis AEs [advanced economies]. […] In this context, under India’s G20 presidency, one of the priorities is to create a framework for global regulation of unbacked crypto- assets, stablecoins and DeFi.”

The RBI has been more bullish on central bank digital currency (CBDC). It launched a wholesale digital rupee pilot project in November and a retail digital rupee pilot project in February. It also signed an agreement with the Central Bank of the United Arab Emirates in March to study a CBDC bridge to facilitate trade and remittances.

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G20 Finance Chiefs Agree Global Policy Responses to Crypto Are Required

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March 18, 2023 Bitcoin.com

India, UAE to explore CBDC bridge to facilitate trade, remittances without USD

March 16, 2023 Coin Telegraph

CBDC

The bridge would be the second for the UAE, whose banks successfully participated in the mBridge project last year with Hong Kong, China and Thailand.

The Reserve Bank of India (RBI) and Central Bank of the United Arab Emirates (UAE) announced on March 15 that they had signed a memorandum of understanding on collaboration and innovation in financial services.

The parties will particularly concentrate on central bank digital currency (CBDC) interoperability and will develop a proof-of-concept and pilot program for a CBDC bridge to facilitate remittances and trade. Such a bridge would reduce costs and increase efficiency of transactions, they noted, and strengthen economic ties.

Indian and UAE banking officials held talks in February on a rupee-dirham payment system using correspondent banks. That system has been under development for a year. The countries currently U.S. dollars to settle payments.

Walking the talk ! @RBI and UAE Central Bank signed a MoU for innovation in financial products. Development and interoperability in the field of Central Bank Digital Currencies (CBDCs) closer than ever. @DasShaktikanta @MEAIndia @Economyae @FinMinIndia @nsitharaman #FilePic pic.twitter.com/GDHC8Z9HdM
— India in UAE (@IndembAbuDhabi) March 15, 2023

Although remittances from the Gulf region are down 50% from 2016-2017, the UAE remains a major source of remittances to India, accounting for 17-18% of the total of around $87 billion, as of July 2022. The UAE was the top source for India until the COVID outbreak, when it was displaced by the United States.

India and the UAE would presumably investigate a retail CBDC to handle remittances. India currently has a domestic digital rupee pilot project with 50,000 users and 5,000 participating merchants. The RBI also reported in late February that it had completed around 800,000 transactions worth $134 million with its wholesale CBDCs, and it has been testing its CBDC’s offline functionality.

India also recently integrated its non-blockchain unified payments interface with Singapore’s PayNow system.

The UAE launched a nine-part financial transformation program and announced its intention to launch a CBDC for domestic and cross-border us in February. Even before that, Emirati banks had participated in the mBridge pilot project, along with banks in Hong Kong, China and Thailand to use CBDC for cross-border transfers. In addition, the UAE expects cryptocurrency to “play a major role for UAE trade going forward,” UAE minister of state for foreign trade Thani Al-Zeyoudi said in January at the World Economic Forum.

RBI