India’s CBDC Has 5M Users, Can be Phased in Gradually: Central Bank Governor

As a seasoned researcher with a knack for tracking central banking developments across the globe, I find India’s gradual approach to implementing retail CBDC particularly intriguing. Having witnessed the rapid pace of technological advancements and financial inclusion initiatives in India over the years, it is refreshing to see the Reserve Bank of India (RBI) taking a measured and thoughtful stance on this transformative digital currency.

The Governor of India’s central bank, Shaktikanta Das, stated that although their pilot for central bank digital currency (CBDC) currently serves more than 5 million users, it is not necessary to hurry the widespread implementation of such a system-wide CBDC.

On Monday, the highest-ranking representative from the Reserve Bank of India (RBI) addressed an assembly at a conference held in Bengaluru.

In simple terms, India revealed their plans for Central Bank Digital Currencies (CBDC) in the Finance Minister’s budget speech of 2022. By the end of 2022, the Reserve Bank of India started pilots for both types of CBDCs. By the end of 2023, the retail version of this digital currency successfully handled over a million transactions on at least one day, with some assistance from banks.

On Monday, Das said as many as 16 banks are currently participating in the retail CBDC pilot but did not reveal a number for the daily transactions.

Previously, the Reserve Bank of India (RBI) has stated that they’re not rushing into a comprehensive rollout of a retail Central Bank Digital Currency (CBDC) and have yet to disclose a timeline for it. However, on this particular occasion, Das suggested the potential for a more incremental approach to implementation rather than a full-scale one.

As a crypto investor, I firmly believe that the introduction of Central Bank Digital Currencies (CBDC) should be a gradual process. It’s crucial to remember that haste makes waste, so we must take our time to fully grasp the implications of CBDC on users, monetary policy, the financial system, and the economy as a whole before rushing into a full-scale rollout.

Starting from January 2023, the Reserve Bank of India (RBI) has been examining offline payment methods and their programmability. According to Das, these explorations are currently being tested.

“The programmability feature of CBDC could serve as a key enabler for financial inclusion by ensuring delivery of funds to the targeted user,” Das said while pointing to two use cases involving farmers launched as part of their pilot recently; Programming the end use for purchase of agricultural inputs to comfort banks and establish the farmer’s identity; farmers getting purpose bound money for generation of carbon credits.

Other suggested applications, which focus on trials for features like anonymity and offline access, will be introduced gradually according to what was stated.