Reserve Bank of India seeks a ‘phased implementation’ of the digital rupee

On Tuesday, September 20, the Governor of the Reserve Bank of India (RBI), Shaktikanta Das, said that the country’s central bank is dedicated to fostering innovation for financial technology businesses while also keeping consumer safety in mind.

Das, who was giving a speech at the Global Fintech Festival in Mumbai, said that technology, innovation, and fintech are working in tandem and adding to the fervor of this industry while stating the RBI would start issuing digital rupees, also known as Central Bank Digital Currency (CBDC), during the current fiscal year.

“Technology, innovation and fintech are working in tandem and contributing to the dynamism of this sector.”

He added:

“We have created a new FinTech Department in the RBI from January 2022 to give focused attention to this evolving and dynamic sector. Further, the RBI is now actively working towards a phased implementation of Central Bank Digital Currency (CBDC) in both wholesale and retail segments. This is expected to give further fillip to the digital ecosystem.”

India’s central bank to encourage tech innovation 

According to Das, the central bank will continue to encourage technological innovation, but in addition to that, it will work to improve consumer safety, cybersecurity, and resilience, as well as maintain financial stability. In addition, he said that it is essential for concerns about governance and behavior in the fintech industry to get proper attention.

Meanwhile, India’s Finance Minister Sitharaman encouraged the fintech sector to “break the distance barrier” and increase the number of interactions it has with the government and its institutions to enhance trust. 

In response to a query on the planned digital currency and the role that the central bank and the finance ministry would play in its implementation, Sitharaman said that the Reserve Bank would be the one to introduce an RBI-driven digital currency. 

The minister said at Global Fintech Fest  2022 that the RBI’s regulatory sandbox system has offered a structured and standardized platform for fintech businesses to test new products and ideas before scaling them.

“So this has actually helped in testing it in a controlled environment and post that you’re able to scale up rapidly so that markets can get the benefit and you can accelerate your product innovations,”  Sitharaman said.  

The RBI desires to develop an integrated platform to provide frictionless credit to rural areas; Das noted that the fintech ecosystem in India is evolving and is poised for “a giant leap.”

Watch the video: Shaktikanta Das addresses Global Fintech Fest