Yearender 2022: From CBDC to WhatsApp Service, Steps Taken By Indian Banks For Ease Of Customers

The Indian banking system saw several important changes, including a trial run of the Central Bank Digital Currency (CBDC s) for the benefit of consumers in 2022. The Reserve Bank of India (RBI ) kicked off the CBDC trial for retail, an ambitious project likely to usher in a new era of digital transactions.

CBDC has been unveiled in the backdrop of biting inflation that left many Indians unable to afford basic foodstuffs. To cool the soaring food prices, the central bank has the repo rates by 225 bps in 2022, which had a cascading effect across the banks’ lending rates .

Here’re some key developments:

Launch of CBDC

On October 31, 2022, RBI announced the first pilot of CBDC, the digital rupee or e₹-W for the wholesale segment. The State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank, and HSBC were selected for the pilot project. After a month, RBI launched the trial for CBDC retail transactions in four select cities, including Mumbai and Delhi.

RBI announced the "tokenisation" standards for payment-related initiatives in another major step.

The bank announced the "card-on-file" tokenisation standards, which went into effect on October 1, in response to several complaints regarding the misuse of debit and credit cards.

RBI's tokenisation rule replaces the old practice of giving card details for each transaction with an alternative code or "token" specific to a card and token requestor. It is mainly used in recurring payments or where merchants have kept the card details to facilitate a quicker checkout process.

Fintech company Paytm tokenised over 52 million cards, including VISA, Master Card, and RuPay, before the October 2022 deadline.

Pension through WhatsApp

The State Bank of India (SBI) has announced that it will send pension slips through WhatsApp for the convenience of senior citizens. The process gets activated when customers send a "Hi" message to a designated bank phone number.

Announcing the facility, SBI said in a tweet: "Now get your pension slip over WhatsApp! Avail hassle-free service at your comfort. Send a "Hi" on +91 9022690226 over WhatsApp to avail of the service."

Punjab National Bank (PNB) and HDFC also have 24x7 WhatsApp services for pensioners. However, customers must register their mobile phones with the bank to avail of the service. Bank of Baroda (BOB) launched the service in Hindi and English for pensioners in October 2022.

RBI Repo Rates Increased By 225 bps In 2022

RBI has increased the repo rates five times in a row to 225 bps or 6.25 percent since April 2022. It raised it by 40 bps in May, 50 bps in June, 50 bps in August and September, and 35 bps in December.

Banking Metaverse

State-run Union Bank of India (UBI) forayed into the metaverse this year after the HSBC Bank and JP Morgan Chase announced their plans for the virtual world.

Metaverse is a major technological advancement for the banking sector globally.

Besides, RBI has issued several lending guidelines for banks focusing on customers' data privacy concerns and reducing fraud, mainly in the ecosystem in 2022, after digital loan fraud, consumer harassment, data exploitation, etc., surfaced.

RBI has issued guidelines for banks and digital lending apps for customer data security. The rules bar regulated entities from keeping borrower data above the bare minimum. Additionally, a lender can only hold data necessary to disburse loans or handle loan repayments, such as name, address, etc. Additionally, digital lending apps are barred from storing borrowers' biometric data.