RBI Working on Off-line Mode To Boost Retail E-rupee-CBDC Volumes: Governor Das

Moneylife Digital Team 07 May 2024

Allaying concerns about the digital currency posing a risk to banks’ business models, Reserve Bank of India (RBI) governor Shaktikanta Das says RBI is working on making the central bank digital currency (CBDC or e-Rupee) transferable in the off-line mode while introducing programmability features and other value-added services to push for financial inclusion. He was speaking at the BIS Innovation Summit 2024 via video-conference.

Talking about concerns on CBDC posing a risk for banks’ business models, Mr Das reminded that the RBI’s digital currency had been envisaged as being non-remunerative and non-interest bearing.

According to the RBI governor, e-Rupee has transformative potential and he sees considerable scope for digitisation of payments. "The pace of retail transactions using the central bank digital currency (CBDC) has picked up but more needs to be done to attain the kind of acceptance that the unified payments interface (UPI) enjoys."

“We have leveraged the existing merchant infrastructure on the UPI to facilitate CBDC transactions... while the number of transactions have reached a high of 1 million a day, we still see preference for UPI among the retail users. We, of course, hope that this will change going forward,” he added.

Commenting on the inter-operability between UPI and e-Rupee, RBI governor says that if customers make CBDC payments, merchants can receive money in UPI-linked bank accounts even if they do not possess CBDC wallets.

Mr Das also reiterated RBI’s stand on the anonymity of the e-Rupee or CBDC. He says, "Anonymity can be addressed through legislation or through technology. For example, through permanent deletion of transactions. That could be one method. The basic principle is that CBDC can have the same degree of anonymity as cash. No more and no less."

RBI defines CBDC as a digital form of legal tender issued by a central bank. Simply put, it is a digital form of fiat currency, i.e., The Indian Rupee. As a result, it can be exchanged for fiat currency one for one.

As per RBI, “CBDC is the legal tender issued by a central bank in a digital form. It is the same as a fiat currency and is exchangeable one-to-one with the fiat currency. Only its form is different.”

CBDC or the digital rupee is different from Bitcoin, Ethereum and other crypto-currencies in the sense that it is backed by the Indian government. Secondly, having an intrinsic value on account of government backing, the digital rupee is equivalent to holding a physical rupee.

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