India's central bank has decided to pilot QR-code-based coin vending machines in 12 cities across the country.
"These vending machines will dispense coins against debit to the customer's account using UPI instead of physical tendering of banknotes," Reserve Bank of India Governor Shaktikanta Das said in his Feb. 8 speech following the monetary policy committee meeting.
These vending machines are intended to be installed at public places such as railway stations, shopping malls, and marketplaces to enhance ease and accessibility, the RBI noted in its statement on developmental and regulatory policies.
"With coins, we have a peculiar situation where the supply is very high, it's taking up a lot of storage space, it's not getting properly distributed... at the same time, there is demand in pockets," deputy governor T Rabi Sankar said during the post-MPC meeting press conference. He added that one way to address this mismatch is to make coins available where there is demand.
While RBI had coin-vending machines placed in high-demand areas in the past, they depended on physical currency being fed to them in exchange for coins. "The problem then was, the currency that was fed in theses machines was found be very often fake and all that," Sankar said.
Given that this issue couldn't be checked, RBI decided to side-step that problem altogether by leveraging a UPI integration with the coin-vending machines.
"Instead of feeding in currency and getting your change, you just transfer money from your bank account to the concerned bank and withdraw your change," Sankar added. RBI expects these machines to help with the distribution of coins in the system, he said.
Based on the lessons learned from the pilot, the RBI will issue guidelines to banks to promote better distribution of coins using such machines, the RBI statement noted.
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