Reserve Bank of India (RBI) Governor Shaktikanta Das has announced plans to investigate offline solutions to facilitate the adoption of the central bank's digital currency (CBDC), known as the digital rupee, in remote regions of the country with limited internet connectivity.
The initiative aims to address the challenges faced in rural and hilly areas where internet access is scarce. Various offline solutions, including both proximity and non-proximity-based options, will be evaluated to enable transactions even in areas with poor connectivity.
During a recent Monetary Policy Committee review meeting, Governor Das revealed the proposal to introduce offline functionality in CBDC-R (Retail CBDC) gradually through pilot programs. This move is intended to support person-to-person (P2P) and person-to-merchant (P2M) transactions using digital rupee wallets provided by pilot banks.
The idea of launching offline capabilities for CBDC was initially discussed in March 2023 by Ajay Kumar Choudhary, the RBI’s executive director. The central bank has been exploring the potential of CBDC for cross-border transactions and integration with legacy systems in other countries.
While the digital rupee undergoes testing for offline capabilities, existing payment platforms like the Unified Payments Interface (UPI) already offer offline functionalities. Siddharth Sogani, CEO of Crebaco, an Indian blockchain analytics firm, emphasized that CBDCs aim to enhance money monitoring and reduce cash transactions in alignment with the government's vision:
“Although CBDCs are an alternate solution, the primary purpose is to have a well-monitored monetary system.”
The RBI initiated a pilot of its retail CBDC in December 2022, achieving the milestone of one million daily transactions by December 2023. Both developing and advanced economies are motivated by financial stability and cross-border payment efficiency in their CBDC projects, with developing nations also seeking to enhance financial inclusion through CBDC adoption.
