CBDC QR code to be interoperable with UPI by July-end: RBI T Rabi Sankar

Aims for 1 million CBDC transactions by year-end

The Reserve Bank of India (RBI) will implement interoperability between central bank digital currency (CBDC) and United Payments Interface (UPI) by the end of this month, Deputy Governor T Rabi Sankar said on Tuesday at an Indian Banks’ Association conference.

The customers would be able to use a single QR code to pay through UPI and CBDC. Thirteen banks have placed the system, and the central bank aims to reach 1 million transactions through CBDC per day by the end of the current calendar year, Rabi Sankar said. At present, banks process 5,000-10,000 transactions per day.
 

UPI is a platform that facilitates digital transactions, where the beneficiary will be able to make payments through debit or credit cards, internet banking or by mobile wallets.
 

 “We decided that a user of CBDC should not be unable to do transactions because a merchant doesn’t have CBDC, so we decided that we will do interoperability,” Rabi Sankar said.  “If a merchant has a CBDC account then the money will go to the CBDC account, and if the merchant doesn’t have a CBDC account, then it goes to the UPI account of the merchant.”

 “Under the interoperability program, 13 banks have already placed the system, but we want to encourage more banks as we should at least have top 20-25 banks under the plan,” Shankar said. “1 million transactions a day is not a big number, as more than 30 crore transactions are made through UPI in a day,” he said.
 

The deputy governor highlighted that the anonymity and offline transactions are the two major challenges that need to be addressed in order to meet the purpose of CBDC.  He also expects CBDC transactions to be cost effective for cross border payment.
 

“Transactions through CBDC are expected to be cost-effective as the cost of cross border transactions is very high at over 6 per cent. The huge amount of these transactions is carried through a few banks, hence, CBDC is expected to help spread out these transactions among banks and bring uniformity which is a fair practice.”
 

He went public with India’s concerns on stable coins, saying that they pose an “existential threat” to most countries’ policy sovereignty. “We should ideally aim for a global financial system which rests on CBDCs issued by each country to settle global payments, and not rely on stable coins,” Sankar said.