In an endeavor to boost the infrastructure and popularity of the Central Bank Digital Currency (CBDC), the Reserve Bank of India (RBI) is ardently working together with various financial institutions. Their objective, according to a Reuters’ report, is to increment the current daily retail CBDC transactions in India from an average of 18,000 to a whopping one million by end of 2023, a target seemingly ambitious.
One of the noteworthy proposals is to integrate the digital rupee with India’s heavily utilized Unified Payments Interface (UPI). UPI, a real-time money transfer system, harmonizes transactions across multiple banks without requiring the revelation of bank account details. The synergy between the digital rupee and UPI may develop a resourceful platform for seamless transactions.
In the roadmap to this anticipated union, the RBI has been encouraging banks to facilitate e-rupee compatibility with UPI via QR codes. Such interoperability will allow easy payments through widely deployed UPI QR codes. Surprisingly, the State Bank of India, the country’s biggest public sector bank, has already incorporated the digital rupee with UPI.
The discourse also delves into contemplating scenarios where both customer and merchant are offline, a common circumstance in many remote areas. Along this trail, HDFC Bank, a top private lender, is reportedly joining hands with technology company IDEMIA to devise offline CBDC transactions for feature phones. However, these proposals are still under examination and no perms have been authorized yet.
Despite the skeptical undertone carried by the offline operations, the idea’s potential is broad, especially considering India’s vast rural population still using feature phones. It might bring a new dawn to their financial inclusion.
During the last G20 summit, India took advantage of the platform by giving foreign delegates a glance into the digital rupee by allowing them to exchange their foreign currency for India’s CBDC. With these ambitious plans, India’s central bank is undoubtedly under the spotlight as it ventures to revolutionize digital transactions and, at the same time, tackle inherent challenges such as security and public adoption.
Source: Cryptonews
