Reserve Bank of India (RBI) Governor Shaktikanta Das recently announced plans to enhance the adoption of the central bank digital currency (CBDC), the digital rupee, by exploring offline functionalities.
These measures aim to facilitate transactions in areas with limited internet connectivity.
The announcement came during a Monetary Policy Committee review meeting on Feb. 8, where Das highlighted the intention to introduce offline functionality in CBDC-R to enable transactions in remote areas. The central bank is considering several offline solutions, both proximity and non-proximity-based, across diverse environments, including hilly, rural, and urban areas.
“These functionalities will be slowly introduced through the pilots,” Das added.
As part of its current capabilities, the CBDC system supports person-to-person (P2P) and person-to-merchant (P2M) transactions via digital rupee wallets issued by participating pilot banks. This development aligns with the RBI’s objective to monitor financial transactions more effectively and move towards a less cash-dependent economy.
Siddharth Sogani, CEO of Crebaco, a blockchain analytics firm, emphasized the existing landscape of payment solutions in India in a recent comment. He highlighted that India already benefits from popular payment platforms with offline capabilities, such as the Unified Payments Interface (UPI).
The RBI’s efforts to expand CBDC’s reach include the examination of its potential for cross-border transactions and integration with international legacy systems. This initiative, initially proposed in March 2023 by Ajay Kumar Choudhary, the RBI’s executive director, underscores the central bank’s broader strategy to facilitate seamless financial transactions beyond domestic borders.
The RBI initiated a pilot for its retail CBDC in December 2022 and successfully achieved one million daily transactions by December 2023. Despite the absence of a definitive timeline for a full-scale retail CBDC rollout, recent advancements indicate a measured urgency in its implementation. Notably, the RBI has also been exploring technological solutions to address privacy concerns associated with the digital rupee.
Amidst the positive outlook on CBDCs in India, the broader cryptocurrency industry in the nation continues to face challenges. Google recently removed several cryptocurrency-related apps from its Play Store, following the Indian finance ministry’s warnings to virtual digital assets (VDAs) providers about anti-money laundering regulation violations. Previously, Apple Inc. also removed major crypto exchanges like Binance and Kucoin from its App Store, signaling tighter regulatory oversight in the country’s digital asset market.
Source: https://crypto.news/indias-reserve-bank-looking-to-introduce-offline-cbdc-functionality-for-remote-areas/