February 25, 2024

Due to the increasing shift to the use of virtual currencies, many countries have decided to join the trend. India has emerged as one of the regions with a high interest in digital currency as it implements measures to promote its CBDC.

A new report revealed that India is expanding the adoption of its CBDC, the digital rupee, in rural areas. It plans to explore offline solutions enabling unlimited internet access within the focused places.

Indian CBDC To Include Programmability Feature

According to a recent update from the Press Trust of India, the country is set to introduce several offline solutions that would boost the adoption of digital rupee. The report noted the move would include both proximity and non-proximity-based solutions accessible in hilly, remote, and urban parts.

Governor Shaktikanta Das of the Reserve Bank of India (RBI) revealed the decision on February 8 during a Monetary Policy Committee review meeting.

The RBI governor stated:

It is proposed to introduce offline functionality in CBDC-R to enable transactions in areas with poor or limited internet connectivity. These functionalities will be slowly introduced through the pilots.

Further, Das gave more insights regarding the Programmability of the move. He mentioned that the current CBDC system allows person-to-person (P2P) and person-to-merchant (P2M) transactions with the pilot banks’ digital rupee wallets.

The RBI governor mentioned that the plan will enable merchants and corporate bodies to adjust the Programmability of the CBDC to expand its usage. Part of the changes would include travel expenditures for staff of different entities.

Das noted:

Programmability will permit users like government agencies to ensure payments are made for defined benefits. Similarly, corporates will be able to program specified expenditures like business travel for their employees.

The country got the first proposal to launch offline solutions in March 2023. Ajay Kumar Choudhary, the RBI’s executive director, stated that the apex bank seeks to test capacity with CBDC.

The testing cut across the digital rupee’s potential for international transactions and linkage with legacy systems outside the country.

Moreover, the testing seeks to unveil the offline capabilities of the digital rupee. 

Expected Impact Of CBDCs In India

Further, the report shared that the CEO of Indian blockchain analytics company Crebaco, Siddharth Sogani, narrated the fundamental need for CBDCsHe recalled that they serve to increase surveillance of money transactions and remove cash usage in the system.

Sogani said:

We already have popular payment services with offline capacities, especially UPI. The CBDCs align with the government’s vision to eliminate cash. Although CBDCs are an alternative solution, the primary purpose is to have a well-monitored monetary system.

Notably, in December 2022, the RBI launched a pilot of the retail CBDC in the country. By the following year, the digital currency recorded up to a million daily transactions.

From Sogani’s statement, the government aims to reduce cash use in India, and the successful pilot program indicates that the citizens support the move. 

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