The Reserve Bank of India (RBI) recently made an announcement about the progress of its pilot program for digital currency. According to RBI Deputy Governor T. Rabi Sankar, CBDC (the RBI’s digital currency) has 50,000 users and is accepted at 5,000 shops.
On December 1, 2022, five Indian cities began participating in a pilot program testing the use of digital rupees in retail transactions; the RBI aims to expand the program to nine other locations over the following year.
Eight banks have handled over 770,000 digital rupee transactions thus far, and the RBI aims to add five more banks to the experiment shortly.
Indian retailers rampantly digging digital rupee
India’s largest retailer, Reliance Retail, announced that it would accept payments in digital rupees. The retail chain has partnered with ICICI Bank, Kotak Mahindra Bank, and fintech Innoviti Technologies to add support for the central bank’s digital currency in its Freshpik gourmet store line.
According to the Atlantic Council’s CBDC tracker, 114 countries, representing over 95% of the global GDP, are currently exploring a central bank digital currency.
India’s move towards CBDCs is part of a larger trend globally, as 105 countries, representing over 95% of the global GDP, are exploring the use of CBDCs.
Several nations have collaborated to explore different use cases of CBDCs under the guidance of the Bank for International Settlements.
The central banks of Israel, Norway, and Sweden have teamed up to explore how CBDCs can be used for international retail and remittance payments, while China, Thailand, Hong Kong, and the United Arab Emirates are working on similar projects.
India has not entered into any CBDC project with any other country yet, but the central bank has indicated that collaboration with stakeholders, including the Bank for International Settlements, will be a way forward in the future.
About India’s CBDC
India launched two CBDC pilots last year: the wholesale CBDC effort (CBDC-W) and the retail CBDC (CBDC-R) pilot. The CBDC-R is meant for the private sector and Indian citizens, while the wholesale CBDCs are restricted to financial institutions and are meant to improve the efficiency of interbank payments.
The country’s government has informed parliament that it will issue a CBDC-R within the financial year 2022-23, but the exact date of implementation is not yet clear.
The RBI has stated that the CBDC will provide an additional option to the current forms of money that are easier, faster, and cheaper to use than existing payment rails, along with the transactional benefits of other forms of digital money.
The Indian government has turned to the country’s media platforms to explain what CBDCs are and what they may be used for. In recent weeks, India’s news networks, particularly government-run and business channels, have focused on explaining CBDCs and their potential role within India’s economy.
India already has a widespread cashless movement through the Unified Payments Interface (UPI). UPI allows citizens to pay for groceries and other goods using a QR code linked to their bank account, automatically transferring money from their bank account to a merchant’s account.