Reserve Bank of India Reveals Launch Plans of Upcoming CBDC

• In February, Finance Minister Nirmala Sitharaman announced a digital currency launch.
• There is still no official regulation on crypto in India.

For 2021-22, the Reserve Bank of India (RBI) produced an annual report. One of the numerous subjects covered in the paper is India’s central bank digital currency (CBDC). “The design of CBDC needs to be in conformity monetary policy, financial stability and efficient operations of currency and payment systems,” the report details.

For the adoption of CBDC, the Reserve Bank suggests a phased approach, starting with proof of concept, pilots, and finally, a full-scale rollout. In February, Finance Minister Nirmala Sitharaman announced a digital currency launch when she presented the Union Budget 2022-23.

According to the RBI report,

“An appropriate amendment to the RBI Act, 1934 has been included in the Finance Bill, 2022. The Finance Bill, 2022 has been enacted, providing a legal framework for the launch of CBDC.”

No Official Regulation Yet

A CBDC would be launched “in a very calibrated, graduated manner, assessing impact all along the line,” RBI Deputy Governor T. Rabi Sankar said in April. RBI has remained anti-crypto for the time being. Shaktikanta Das, the Reserve Bank of India governor, issued a warning last week against investing in the crypto industry after the demise of cryptocurrency terra and stablecoin Terrausd (UST).

There has been a recent warning from the country’s central bank that cryptocurrency poses a serious danger to the country’s economic and financial stability, which was made in February. As the deputy governor of the bank put it, it is “most advisable” for India to outlaw cryptocurrencies, and that regulation is “futile.” There is still no official regulation on crypto in India; however, crypto revenue is being taxed at 30 percent. An additional 1 percent of taxes will be collected in India in the near future through tax deducted at source (TDS).