Reserve Bank of India (RBI) has announced an expansion of wallet providers of its Central Bank Digital Currency (CBDC) wallet. The statement from the bank notes that it will empower non-payment operators to offer wallet services of its CBDC. The bank said that it will make the needed changes to effect this as the initiative is expected to enhance access and user choices.
India’s RBI includes non-payment operators in its CBDC test
The RBI released a statement on developmental and regulatory policy, touching on the various developments and regulations in its financial sector. The statement also contained the bank’s plan to involve non-payment operators in the distribution of its CBDC. The bank clarified that it is presently carrying out a pilot test on the retail and wholesale aspects of the CBDC.
The Reserve Bank of India also confirmed that it has increased the scope of the test, adding more use cases and participation institutions. The RBI added that the move to include non-payment operators was to ensure that the retail CBDC is available to a wider section of users in a sustained manner. This move will also ensure that aside from testing the ability of the system to handle multiple transactions, it will afford users more choices and access.
The RBI kickstarted the pilot test of its wholesale digital rupee in November 2022, initiating the pilot test of the retail segment in December of the same year. In a subsequent statement, the Deputy Governor of the RBI discussed the volume of transactions. The transaction volume hit one million in December 2023, noting that it was through the interoperability with India’s instant payment system UPI. However, he noted that the volumes have been increasing slowed since then.
Progress and challenges of the CBDC
Since the start of the pilot test in December 2022 till now, the cumulative transactions have surpassed 22 million. In the same duration, there have been more than 4.6 million users onboarded while about 400,000 merchants have been involved in the project. With only a handful of merchants accepting the CBDC, most of the transactions have been peer-to-peer. There has also been a huge shift to the retail CBDC since most stores have started accepting it.
With the progress made, the RBI has announced it will add new functionalities. This means that it would expand to programmable payments and offline functionality which the bank announced in February. Offline payments are still being tested internally, while programmable payments have kickstarted with the first official payment received by a farmer to make payments for agricultural products.
However, crypto regulations remain a big issue in India, with Finance Minister Nirmala Sitharaman stating that crypto assets cannot be cryptocurrencies. The minister mentioned that although there is no regulation concerning cryptocurrencies presently, she could view a framework emerging in the future. Earlier this year, RBI Governor Shaktikanta Das discussed cryptocurrencies and how they threaten India’s financial system, stability, and currency.
