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Tag: Deputy Governor

  • Retail CBDC transaction volumes have settled below 10 lakh per day

    Retail CBDC transaction volumes have settled below 10 lakh per day


    After achieving the milestone of 10 lakh CBDC-R (Central Bank Digital Currency – Retail) transactions per day in December 2023, volumes have now settled slightly below this level, Reserve Bank of India Deputy Governor T Rabi Sankar said.

    “When we targeted 10 lakh transactions, a lot of co-ordinated efforts were required for it to be reached. Then we found issues in terms of scalability of technology and banks being able to handle that. So for the last few weeks we have largely been addressing those issues,” Sankar said at the sidelines of a technology event organised by Indian Banks’ Association (IBA).

    “Transactions have settled at a slightly lower level but it’s much better than what was earlier,” he said, adding that the value of transactions is “some crores”. The central bank will soon issue periodic data on the same in the public domain.

    “On the retail side, it’s the technology, how systems cope and how people behave. These are the focus areas, we’re not looking at volumes,” he said adding that matter such as currency use involve a lot of behavioural variables which don’t happen overnight. “They happen slowly, and it’s good that they happen slowly.“

    Wholesale CBDC

    Under the wholesale e-rupee pilot (CBDC-W), the focus is not on volumes but on trying out new use cases as done in the case of government securities and call money markets so far, Sankar said, adding that uptick in the call market has been good with regular transactions of small amounts.

    “Next step we’re thinking of trying out tokenisation of assets, government bonds and such. But we’ll just try them out, we’re not looking to have volumes because the idea is to try out the technology,” he said.

    Sankar added that ultimately the benefit under wholesale CBDC will come through cross-border transactions, wehrein there will be a lot of savings in terms of settlement risk. However, cross-border CBDC will take some time because RBI is still testing the technology and it is yet to settle within India.

    “We are testing and we are trying out new functions. Let it settle down. Cross-border talks are going on. Some countries have shown interest and we are talking to them, that’s a step ahead,” he said.





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  • RBI DG Sankar calls for fintech SRO to proactively address industry issues

    RBI DG Sankar calls for fintech SRO to proactively address industry issues

    RBI Deputy Governor T Rabi Sankar, on Tuesday, called for self-regulatory organisations (SROs) in the fintech industry to proactively address issues such as market integrity, conduct, data privacy, cybersecurity, and risk management.

    “As regulators continue to contemplate, implement, and refine regulations for the orderly development of the fintech sector, SROs could play a pivotal role in the fintech industry by promoting responsible practices and maintaining ethical standards,” said Sankar at the Global Fintech Fest 2023.

    These industry-led bodies will help establish guidelines and codes of conduct that foster transparency, fair competition, and consumer protection. Further, they will facilitate collaboration between fintech firms, regulators, and stakeholders, creating a framework for innovation with guardrails, he said, adding that SROs will help build trust among consumers, investors, and regulators.

    “What is different about the recent financial innovations is the speed and scope of such changes making them potentially much more disruptive,” he said, adding that rapid technology changes can outpace regulatory frameworks, thus raising issues about market integrity, consumer protection, data privacy, and fair market practices.

    Fintechs have brought about transformation in the form of increased efficiency, with which financial products and services are delivered and consumed. This has been driven by digitisation of information for easier access, processing and transmission, direct interface between buyers and sellers, borrowers and lenders, and payers and receivers, and democratisation of fast communication channels.

    “Put together, these efficiencies lead to lower cost, quicker transactions and better inclusion. This is clearly a desirable outcome and one that should be actively encouraged and promoted, which is what the focus of policy making and regulation currently is,” Sankar said.

    In turn, traditional financial players are reacting by either internalising innovations to compete with fintechs, or are collaborating with fintechs through one-to-one partnerships or by purchasing their services.

    The second route is more functional because fintechs can perform in areas where they have a competitive advantage and banks can focus on their areas of their expertise. While customers benefit from curated products and services at competitive prices, the regulator also takes comfort from the fact that the traditional players are well regulated.

    “Perhaps the sweet spot lies in fintechs acting as both competitors as well as collaborators. The existence of competition is necessary to create incentives for fintechs to invest in innovations as well as pushing traditional entities to stay on their toes. At the same time, collaboration is essential for innovations to be absorbed into the financial systems,” he said.

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