The Reserve Bank of India (RBI) is taking significant steps to make its Central Bank Digital Currency for Retail (CBDC-R) more accessible to the general population. In a recent announcement, the RBI proposed allowing non-bank payment system operators, such as third-party payment applications like Phone Pe and Google Pay, to offer CBDC wallets. This move is aimed at enhancing access and expanding choices available to users, while also testing the system’s resilience to handle multi-channel transactions.
Experts view this decision positively, recognizing that wider accessibility to CBDCs will contribute to financial inclusion and innovation. V. Balasubramanian, CEO of FSS Cash Tech, emphasized the importance of diverse accessibility for higher CBDC adoption. He noted that enabling non-bank payment system operators to offer CBDC wallets will broaden the reach of CBDCs and potentially turn them into a mainstream payment option in the future.
The RBI initiated the CBDC pilot program in 2022, introducing the Digital Rupee as a tokenized digital version of the Indian Rupee. The pilot programs for CBDC Wholesale and Retail segments are ongoing, with an increasing number of banks participating. While the volume of CBDC transactions has slightly decreased, there has been a notable shift from peer-to-peer (P2P) to peer-to-merchant (P2M) transactions, indicating growing merchant participation.
During a post-policy press meet, RBI Deputy Governor T Rabi Sankar highlighted that there are nearly 46 lakh users and 4 lakh merchants participating in CBDC transactions, with a total of around 50 lakh participants. So far, the total transactions through CBDC have reached 2.2 crore.
The RBI is also working on enhancing the functionalities of CBDC, including programmability and offline capability. Programmability is expected to enable transactions for specific purposes, while offline functionality will facilitate transactions in areas with limited internet connectivity. Sankar announced the initiation of the first use case of programmability, allowing farmers to transact through CBDC for their inputs.
Additionally, the interoperability between CBDC and the United Payments Interface (UPI) has been instrumental in driving overall CBDC volumes. Sankar noted that achieving the target of 1 million transactions was a significant milestone, and interoperability with UPI played a crucial role in its attainment.
Overall, the RBI’s efforts to enhance CBDC accessibility, functionality, and interoperability reflect its commitment to modernizing India’s payment ecosystem and fostering financial inclusion and innovation.
