The Reserve Bank of India (RBI) has clarified its stance on the future of its central bank digital currency (CBDC), saying that the objective is not to replace the current system of payments.
Deputy Governor Rabi Sankar disclosed the RBI’s stance at the recently concluded G20 meeting, reiterating that banks and bond market players will remain prominent in India’s financial system. Since the start of a CBDC pilot at the tail end of 2022, the central bank has succeeded in onboarding over 50,000 customers and 5,000 merchants drawn from participating financial institutions.
“That was pilot; it was not intended to move banks and others away from the existing NDS-OM (Negotiated Dealing System – Order Matching) system that is there,” Sankar said.
Quelling concerns, Sankar added that the digital rupee pilot would be forging ahead with onboarding more users to allow it to reach more realistic conclusions. The Deputy Governor stated that in addition to growth, the RBI would explore a gamut of features with the digital rupee to make it attractive to consumers.
“So, we are targeting to have about half a million users in the next quarter and probably get almost all major banks in the loop and as many merchants as possible,” said Sankar. “Then we would actually see people using it in sufficient numbers for us to draw some conclusions.”
While the RBI is making steady progress with wholesale and retail iterations of the digital rupee, plans are underway to introduce India’s Unified Payments Interface (UPI) to several Commonwealth countries and Southeast Asia. Last week, India and Singapore joined forces by linking their digital payments system to improve the state of cross-border payments between both countries.
Digital rupee making significant gains
Indian firms are opening their doors to the digital rupee in a move widely considered capable of boosting the CBDC’s adoption. In early February, India’s largest retail chain Reliance Retail confirmed that it would launch in-store support for the digital rupee using QR codes.
“This historic initiative of pioneering the digital currency acceptance at our stores is in line with the company’s strategic vision of offering the power of choice to Indian consumers,” said Reliance Director V Subramaniam. “With more Indians willing to transact digitally, this initiative will help us provide yet another efficient and secure alternative payment method to customers at our stores.”
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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