RBI’s New Pilot Project on Coin Vending Machines

Context:

The RBI in collaboration with banks, would be launching a pilot project to assess the functioning of a QRcode based coin vending machine.

About QRcode Based Coin Vending Machine:

The vending machines would dispense coins with the requisite amount being debited from the customer’s account using United Payments Interface (UPI) instead of physical tendering of banknotes.
Customers would be endowed the option of withdrawing coins in required quantities and denominations.
The central idea here is to ease the accessibility to coins.
The proposed mechanism for coin dispensation would be a departure from the conventional machines which relied on banknotes for facilitating coin exchanges.
Further, the proposed machine would eliminate the need for physical tendering of banknotes and their authentication.

Are coins significant in our ecosystem?

As per the latest RBI bulletin, the total value of circulation of rupee coins stood at ₹28,857 crores in 2022 – an increase of 7.2% in a year.
For perspective, coins in India are issued in denominations of 50 paise, one rupee, two rupees, five rupees, ten rupees and twenty rupees. Coins of up to 50 paise are called ‘small coins’ while those of one rupee and above are called ‘rupee coins’.
The figures above could be compared to the volume of digital payments until December 2022 which stood at approximately ₹9,557.4 crore, as per the Digidhan Dashboard. The number is inclusive of mobile banking, internet banking, IMPS, BHIMUPI and NEFT.

Is it going against the digital push?

Thus should not be viewed as a “zero sum game of digital versus cash.” The two can easily supplement each other.
If digitalisation is not solving a particular problem at this given point of time, then it is very much within RBI’s purview to use other means available to achieve its ultimate objective that is to operate the currency system of the country.