RBI to make digital rupee available offline

The Reserve Bank of India (RBI) Governor Shaktikanta Das on Monday said the central bank is considering testing Central Bank Digital Currency (CBDC) in commercial papers and certificates of deposits on a pilot basis. The governor was speaking during a virtual interaction at BIS Innovation Summit 2024, at Basel, Switzerland.

Das said that the central bank has been working on making CBDC transferable offline, introducing programmability features and promoting financial inclusion. “We are working on making CBDC transferable in the offline mode also.”

The RBI is also addressing concerns about CBDC’s potential risk to bank business models. Das said that the RBI wants to increase the pace of retail transactions using CBDC similar to what the UPI has achieved.

Currently CBDC transactions have reached one million per day but people still prefer using instant mobile payments mode, Das said. “Going forward, other instruments like commercial papers and certificates of deposits will be tried out in the pilots along with securities tokenisation features," Das said.

“The key objective of the pilots has been a change in consumer behaviour vis-a-vis bank deposits, we need many more transactions to understand its wider economic effects, especially on monetary policy and the banking system,” Das said. However, by making CBDCs as “non-remunerative” and “non-interest bearing,” any potential risk of bank dis-intermediation has been mitigated, he said during the panel discussion.

The RBI launched the wholesale pilot of CBDC on November 1, 2022, to settle trades of G-Secs using the digital rupee and the retail CBDC pilot was started on December 1, 2022.