RBI to offer CBDC-R accessible to non-bank payments system operators

Farmers to transact through CBDC-R for inputs, first use case of programmability starts today

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The Reserve Bank of India (RBI) on Friday proposed to make CBDC-R (CBDC-Retail) accessible to a broader population by allowing non-bank payment system operators to offer CBDC wallets.

Non-bank payment system operators include third-party payment applications like Phone Pe, Google Pay, etc.

According to RBI, this move is expected to enhance access and expand choices available to the users apart from testing the system resilience to handle multi-channel transactions.

According to experts, this step from the apex bank is in the right direction as CBDC will aid in financial inclusion and boost innovation.

V. Balasubramanian, CEO, FSS Cash Tech, said, “For higher adoption of CBDC, it is important that it is accessible and usable by diverse sections of our society. This will be further enhanced when customers have a wide array of CBDC wallets to choose from once non-bank payment system operators foray into this area. This move widens the playing field and can turn CBDC into a mainstream payment option in the foreseeable future.”

RBI launched the CBDC pilot programme in 2022. The Indian CBDC, also known as Digital Rupee, is a tokenised digital version of the Rupee issued by RBI.

The pilots for CBDC Wholesale and Retail segments are ongoing, with more and more banks being roped in.

During the post-policy press meet, Deputy Governor T Rabi Sankar noted that even though the volumes of CBDC have come down from 1 million, there is a visible shift in transactions from P2P to P2M as more and more merchants participate.

According to Sankar, there are nearly 46 lakh users in CBDC and 4 lakh merchants, with a total of around 50 lakh participants. So far, the total transactions through CBDC have reached 2.2 crore.

During the (Monetary Policy Committee) MPC meeting in February 2024, RBI had proposed to enable additional functionalities of programmability and offline capability in CBDC retail payments.

As per RBI, programmability in CBDC was expected to facilitate transactions for specific or targeted purposes, whereas offline functionality enabled these transactions in areas with poor or limited internet connectivity.

In the press meet, Rabi Sankar noted the first use case of programmability has started on Friday, which is a use case for farmers to transact through CBDC, which can be used for their inputs. Offline transactions have already been developed and are being tested in a closed group within banks, which will be open once the setup is ready.

Also, RBI’s implementation of interoperability between CBDC and United Payments Interface (UPI) has aided in driving the overall CBDC volumes.

“Last year, we said that we wanted to test the resilience of the system when transactions rose to 1 million. We had set that target for the end of the year and we achieved that target. Interoperability with UPI has been useful in achieving that target,” Sankar added.