India considers CBDC offline functionality: RBI executive director

    Simar Marwaha
    Simar Marwaha
    Published on March 04, 2023 05:26 PM

    According to the executive director of RBI, India's recently established internal CBDC is now being assessed for offline use. Let's find out more about it.

    India considers CBDC offline functionality: RBI executive director
    Source: Unsplash

    Ajay Kumar Choudhary, executive director of the Reserve Bank of India, announced that India's recently created domestic central bank digital currency (CBDC), the digital rupee (e), is now being evaluated for offline capability. The RBI serves as both India's central bank and regulatory authority.

    The RBI began testing the wholesale section of the digital rupee on November 1 of last year. For real-world testing, the project onboarded 50,000 users and 5,000 merchants. As of February 25, 800,000 transactions totaling around $134 million have been carried out through wholesale CBDCs.

    Choudhary claimed that the RBI is looking at the offline functionality of CBDC based on this development. He said that the central bank is evaluating the CBDC's potential for cross-border transactions and interoperability with legacy systems in other nations in an interview with CNBC TV18. 

    He added:

    “We are eagerly looking forward to private sector and fintechs’ participation in CBDC. We will see their contribution, especially on offline and cross-border CBDC transactions.”

    The central bank expects fintech companies and the private sector to participate in CBDCs. According to Choudhary, the CBDC will soon serve as a trade means and must have all the properties of actual money, including the anonymity.

    RBI wants CBDCs to take the role of cryptocurrencies. India established the CBDC in an effort to increase financial inclusion in the area and take the lead in the digital economy. Moreover, Choudhary predicted that, ultimately, CBDC would replace cryptocurrency.

    Four major Indian banks will initially handle outgoing remittances: the State Bank of India, Indian Overseas Bank, Indian Bank, and ICICI Bank.

    Remittances coming in will be handled by Axis Bank and DBS Bank India. Users in the region can use the service through DBS Bank and Liquid Group in Singapore.

    Singapore now has access to the unified payments interface (UPI), India's national payment network. Indian and Singaporean people may move money across borders quickly thanks to the UPI PayNow connection.

    2,347 transactions per second, or 7,404.45 crore transactions, were made possible through UPI last year. The entire transaction value increased by 1.75 times over 2021 to Rs. 125.95 lakh crore.