India’s central bank digital currency (CBDC) currently has over 5 million users and 16 banks in its pilot phase, but the Reserve Bank of India (RBI) is in no rush to launch it officially.
Governor Shaktikanta Das confirmed the number of CBDC users in a speech in Bengaluru. He said CBDC could have a significant impact on financial inclusion and that the pilot project was successful, but made it clear that banks are buying time before rushing to a public launch, following the approach taken by more advanced CBDC powerhouses like China.
India launched a wholesale CBDC pilot in November 2022, and a retail version a month later. Since then, efforts have focused on the pilot, which has attracted more than 400,000 local merchants.
“It is important to emphasize that we should not rush to launch a system-wide CBDC until we have a comprehensive understanding of the impact on users, monetary policy, the financial system, and the economy. This understanding will be demonstrated by generating user data in the pilot. The actual introduction of CBDC can be done gradually and in stages,” the governor said at the 90th anniversary event.
The top bank will continue to experiment with new features of the digital rupee. It is currently testing offline payments and programmability, the governor said.
India has seen a steady increase in internet penetration in recent years, with a recent report saying that over 800 million Indians are connected. However, a significant portion of the population of 1.4 billion people does not have internet access, making offline payments crucial to the success of the digital rupee.
On the other hand, programmability diversifies the use cases of CBDC. According to Das, in one pilot, a financial institution issued a programmable loan to a farmer, the funds of which could only be used to purchase a pre-determined set of agricultural inputs. This “provided a necessary convenience for the bank, thereby establishing the identity of the farmer through the end use of the funds disbursed, rather than through land ownership.”
The bank plans to test features like anonymous transactions in the future. In the past, Das has suggested that new laws, such as permanently deleting transactions, could facilitate anonymity.
The RBI still believes there is a lot of potential in a digital rupee, with the governor saying it “has the potential to underpin future payment systems for both domestic and cross-border payments”.
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