RBI explores offline solutions to improve CBDC adoption

The Reserve Bank of India (RBI) has revealed its intention to explore offline solutions to improve CBDC adoption in India's remote areas

The Reserve Bank of India (RBI) has revealed its intention to explore offline solutions to improve CBDC adoption in India’s remote areas. In essence, the bank is looking for offline solutions to promote the adoption of its central bank digital currency (CBDC), the digital rupee, in areas of the country with limited internet connectivity.

Various offline solutions, including proximity and non-proximity-based methods, will be assessed for their feasibility in hilly, rural, and urban environments. These efforts aim to address challenges related to internet access. During a Monetary Policy Committee review meeting, Reserve Bank of India representatives talked about the new proposal and highlighted that the new functionalities would be gradually implemented via pilot programmes.

Regarding programmability, officials mentioned that the current CBDC system allows for person-to-person (P2P) and person-to-merchant (P2M) transactions through digital rupee wallets provided by pilot banks. The concept of launching offline capabilities was initially proposed in March 2023 by the RBI's executive director, aiming to test CBDC's potential for cross-border transactions and integration with legacy systems in other countries. While the digital rupee undergoes testing for offline capabilities, existing payment platforms, notably the Unified Payments Interface (UPI), already offer offline features.

Representatives from the Indian blockchain analytics firm Crebaco cited by cointelegraph.com, highlighted that the primary objective of CBDCs is to enhance monetary oversight and reduce cash usage. The RBI initiated a pilot of its retail CBDC in December 2022, reaching a number of one million daily transactions in December 2023. According to cointelegraph.com, both developing and advanced economies largely share common motivations for their CBDC initiatives, which are ensuring financial stability and improving cross-border payment efficiency.

However, developing nations also aim to enhance financial inclusion through CBDCs. More information about the digital rupee In February 2023, India-based banks ICICI, IDFC First and Kotak Mahindra began testing in-store payments using the retail version of the digital rupee. The endeavour was part of the first phase of the Reserve Bank of India’s retail central bank digital currency pilot.

For its in-store digital rupee test, IDFC First Bank leveraged POS technology provided by sound-based payments solution provider ToneTag. As for trial online retail transactions, they were processed via the CCAvenue Indian digital payments gateway. At the time, CCAvenue officials highlighted how easy it was for merchants to accept digital payments, particularly since the central bank digital currency was a legal tender and shared similarities with conventional paper currency.


Feb 12, 2024 11:59
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