India’s Reserve Bank (RBI) is gearing up to enhance the offline transfer capabilities of its Central Bank Digital Currency (CBDC), according to a report by The Economic Times. RBI Governor Shaktikanta Das revealed at the 2024 BIS Innovation Summit that there has been a rise in transactions among individual users of India’s digital rupee (CBDC).
In order to promote wider adoption, Das emphasized the need to integrate the Unified Payments Interface (UPI) more extensively. He stated, “We utilized the existing trade infrastructure on UPI to facilitate CBDC transactions. While the number of transactions has reached as high as 1 million per day, we still see UPI being favored by individual users. However, we hope this will change in the future.”
The offline mode for CBDCs will offer a significant advantage similar to cash, as it will enable transactions even without internet access. Das also confirmed that the CBDC will provide a level of anonymity comparable to cash, stating, “The issue of anonymity can be addressed through legislation or technology, such as permanently deleting transactions. This could be one of the methods used. The fundamental principle is that CBDC should be as anonymous as cash, no more, no less.”
Das also highlighted that India’s digital rupee is designed not to offer interest, unlike traditional bank deposits, in order to preserve the business models of banks. This feature reduces the risk of banks being eliminated from the mediation process.
RBI is taking steps to integrate the upcoming CBDC with fast payment systems, specifically UPI, in response to feedback from individual users. One of the measures being implemented by the bank is the introduction of a single QR code that can be used for both UPI and CBDC payments, simplifying the acceptance process for businesses.
While developed countries are adopting a cautious approach, India stands out as one of the few pioneering nations in CBDC trials. The country is expanding the use of its digital currency, e-Rupi, through a pilot program launched in December 2022. Thus far, more than 1.3 million people and 300,000 businesses have participated in the program.
As of March 2023, over $1.2 million worth of rupees have been circulated. However, the majority of this money (65%) is currently used in the wholesale segment, with individual adoption rates remaining at 35%.
India’s RBI is among the vast majority (98%) of central banks worldwide actively researching CBDCs. These studies aim to enhance the functionality and accessibility of central bank money.
