IDFC First Bank, ToneTag partner to launch CBDC payments

RBI to launch a pilot for retail digital rupee on December 1 (e r) After one month of testing the Wholesale CBDC with four banks across four cities including IDFC First Bank.

As part of the pilot, the digital currency is issued in uniform denominations and distributed through financial intermediaries and users will be able to transact through digital wallets offered by participating banks.

CBDCs will primarily be used for retail payments in the same way as “cash”. It will be a digital rupee (eg -R) denotes legal tender in the form of digital tokens and is issued in the same denomination as paper currency and coins and will be distributed through intermediaries, i.e. banks. As per RBI, users will be able to transact with e -R through a digital wallet offered by participating banks and stored on a mobile phone or hardware wallet to facilitate person-to-person (P2P) and person-to-merchant (P2M) transactions. E -R will continue to offer physical cash the features of safety, reliability and finality of settlement. In the case of cash, it will not earn any interest and can be converted into other forms of money, such as deposits in banks.

Madhivanan Balakrishnan, COO, IDFC FIRST Bank said, “This solution will transform the way merchants transact and IDFC FIRST Bank is a proud partner in this collaboration. Another step in that direction. As a bank that strongly believes in ‘customer first’ approach, this initiative aligns well with the same.”

Kumar Abhishek, Founder and CEO, ToneTag, said, “We are delighted to collaborate with IDFC First Bank and participate in the first phase of the CBDC retail pilot. In this pilot, ToneTag will provide solutions through which merchants will be able to accept digital currency. With this launch, India becomes one of the few countries globally to have taken this leap to digitize cash and facilitate payments and securities settlement, while mitigating counterparty credit and liquidity concerns. has leveraged its potential to increase efficiency. This is really going to be India’s decade and many kudos to the RBI.”

The main drivers for considering the issuance of a CBDC in India are reducing operational costs associated with handling physical cash, promoting financial inclusion, improving the flexibility, efficiency and innovation of the payment system, increasing the efficiency of the settlement system, need to be promoted. innovation in cross-border payments, and giving the general public access to the uses that private virtual currencies can provide without the risks involved.