In a significant move aimed at enhancing financial inclusion, the Reserve Bank of India (RBI) Governor, Shaktikanta Das, announced the expansion of the Central Bank Digital Currency (CBDC) beyond peer-to-peer and peer-to-merchant transactions. The announcement came during the conclusion of RBI’s three-day Monetary Policy Committee (MPC) meeting on February 8.
Governor Das revealed that the bank would introduce additional use cases for CBDC by modifying its programmability. The proposed introduction of offline functionality for CBDC is expected to address challenges faced by individuals, particularly senior citizens, residing in areas with limited or no internet connectivity.
“The CBDC Retail (CBDC-R) pilot currently enables Person-to-Person (P2P) and Person-to-Merchant (P2M) transactions using digital rupee wallets provided by pilot banks. It is now proposed to enable additional use cases using programmability and offline functionality,” stated Governor Das.
Highlighting the benefits of programmability, Governor Das emphasized its potential for government agencies to ensure payments for defined benefits and corporates to program specified expenditures, such as business travel for their employees. Additionally, he outlined plans to incorporate additional features in CBDC to address validity periods and geographical restrictions, enhancing its usability across various segments and purposes.
The introduction of offline functionality is poised to facilitate digital currency transactions in remote and hilly terrains with poor or limited internet connectivity. Governor Das affirmed, “Multiple offline solutions (proximity and non-proximity based) across hilly, rural, and urban locations will be tested for this purpose, and these functionalities will be gradually introduced through the pilots.”
The announcement underscores RBI’s commitment to leveraging digital innovations to promote financial inclusion and accessibility across diverse demographics and geographical landscapes. As the CBDC evolves with expanded functionalities, it holds the potential to reshape India’s digital payments ecosystem, fostering greater financial resilience and inclusivity.
