Indian central bank seeks volunteers for digital rupee trials

The Reserve Bank of India (RBI) is appealing to businesses to take part in pilot programmes using the e-rupee in a bid to push the number of transactions to a million a day.

India’s central bank began trials last year of its digital currency, or e-rupee, with large state-owned and private lenders, both in the wholesale and retail markets.

The RBI’s attempts to ramp up the e-rupee trials comes as the Bank of International Settlements (BIS) published a survey that found nearly two dozen central banks across emerging and advanced economies are expected to have digital currencies in circulation by the end of the decade.

“Most central banks are exploring central bank digital currencies (CBDCs), and more than half of them are conducting concrete experiments or working on a pilot,” it said.

At the moment, large state-owned and private lenders, including State Bank of India, Bank of Baroda, ICICI Bank, HDFC Bank, Kotak Mahindra Bank and Yes Bank, are among those participating in the pilot project.

“The RBI has asked smaller banks to either tie up with fintech players or develop their systems to start CBDC pilots this year,” said a senior figure of one state-owned bank, who attended the meeting with RBI officials on Tuesday.

The banker, who did not want to be named, told the Asia Financial website: “We will now have to float tenders to get interested fintech partners on board and evaluate the costs involved. This process is expected to take about four to five months.”

The RBI has already set a target of one million CBDC transactions per day by the end of this year, RBI deputy governor T Rabi Sankar told a recent meeting between the central bank and lending institutions.

There were 1.3 million customers and 0.3 million merchants, who used CBDC as of June 2023, he said.

“By getting more banks to participate in the pilots, the RBI wants to see if there are any glitches in implementation and conduct pilots on a large user base,” said another banker with a state-owned bank.

“We are in the advanced stage of submitting a CBDC pilot request to the RBI. We expect the approval to come in the next one-two months.”

The central bank has also asked smaller banks to seek feedback from those currently conducting the pilots, the bankers said.

 

Indian firms may be rated on GST compliance

Indian vendors may be rated on how compliant their business is with the Goods and Services Tax (GST) regime, according to GST Network CEO Manish Kumar Sinha.

The government is setting up a pilot project to try out biometric authentications for applicants to be able to register with the GST framework.

While GST officials are cracking down on fake invoicing and other tax evasion techniques, they have also found more than 11,000 firms that were considered ‘fake registrations’, some of which were set up on the back of identity theft.

Shashank Priya, a member at the Central Board of Indirect Taxes and Customs (CBIC), said a pilot was being designed for biometric authentication of Aadhaar of ‘high-risk’ applicants, cross-checked with verification on e-mail and mobile phone numbers.

Aadhaar is a 12-digit individual identification number issued by the Unique Identification Authority of India on behalf of the government of India.

Priya said that the risk score for applicants would be determined on the basis of detailed parameters and sophisticated data analytics, which would be further made robust by using artificial intelligence and machine learning.

GST Networks’ Manish Kumar Sinha said there was a move towards vendor ratings that may include providing all relevant data points to the industry which was largely compliant. “The GST law has a section dedicated to compliance rating and this will in one form or the other come into play,” he said.