In a bid to enhance the utility of its Central Bank Digital Currency (CBDC), the Reserve Bank of India (RBI) is actively working on developing an offline transfer capability, as highlighted by RBI Governor Shaktikanta Das at the BIS Innovation Summit 2024.

Boosting Retail Transactions with Digital Rupee

Governor Das emphasized the increasing use of India's digital rupee (CBDC) for retail transactions, noting a surge in daily transactions to a record high of 1 million. However, he acknowledged the prevalent preference for the unified payments interface (UPI) among retail users and highlighted the need for further initiatives to bridge this gap.

Offline CBDC Transactions and Anonymity

One of the significant developments highlighted by Governor Das is the introduction of an offline mode for CBDC transactions, enabling individuals to conduct transactions even without internet connectivity, akin to cash transactions. He reassured the public that CBDC transactions would offer anonymity comparable to cash, addressing concerns through legislation and technology, such as permanent deletion of transactions.

Alignment with UPI and Business Models

The RBI is actively working on integrating fast-payment systems like UPI with CBDC to cater to the demands of retail users. Initiatives include enabling a single QR code for both UPI and CBDC payments, simplifying the acceptance process for businesses. Additionally, Governor Das clarified that India's digital rupee would not offer interest, ensuring the safeguarding of banks' business models and mitigating the risk of bank disintermediation.

India's CBDC Journey

India has been at the forefront of CBDC experimentation, with the introduction of the e-Rupee digital currency through a pilot program launched in December 2022. The program has witnessed significant participation, with over 1.3 million customers and 300,000 merchants involved. While over 16 crore rupees ($1.2 million) were circulated by March 2023, retail adoption currently stands at 35%, with the majority of usage concentrated in the wholesale segment.

Global CBDC Exploration

India's RBI is part of the global trend, with 98% of central banks worldwide actively exploring CBDCs through various research, pilot programs, or implementation efforts. The overarching goal is to enhance the functionality and accessibility of central bank money, reflecting a broader shift toward digital innovation in the financial sector.