Forbes India 15th Anniversary Special

RBI aims for 1 mln digital rupee transactions daily by end-2023: Deputy governor

T Rabi Sankar reiterated the need for CBDCs to promote cross-border trade and improve efficiencies. The number of banks adopting CBDCs is expected to double to 25 soon

Salil Panchal
Published: Jul 12, 2023 10:55:02 AM IST
Updated: Jan 29, 2024 05:58:53 PM IST

RBI aims for 1 mln digital rupee transactions daily by end-2023: Deputy governorCBDC transactions are estimated to be between 5,000 to 10,000 per day Image: Shutterstock

The Reserve Bank of India (RBI)—which is running pilots for the Central Bank Digital Currency (CBDC) through 13 banks and around 3 lakh merchants nationwide—hopes transactions through this system touch one million per day by end-2023, Deputy Governor T Rabi Sankar told a bankers’ gathering on Tuesday.

Currently, CBDC transactions are estimated to be between 5,000 to 10,000 per day, he added.

“I am targeting one million transactions because it is high enough to understand and study the pattern and not too high that it cannot be achieved,” he told bankers at a meeting of the Indian Banks’ Association. Currently, the vastly popular and well accepted Unified Payments Interface (UPI) platform sees near 300 million transactions per day.

He was hopeful that, in coming weeks, the number of banks adopting and offering CBDC solutions to its customers will keep increasing. “We need at least 20-25 top banks in the country to be present,” he said.

Sankar said the central bank is considering ensuring interoperability of CBDC with UPI, for improved acceptance of CBDC with the general public. He said he was hopeful that, by July-end, a system would be in place where if a merchant has a CBDC account, it would be settled immediately, but if not it would use a QR code as a UPI option, he said.

Last week, Sankar had added that there was no official CBDC launch date set out. The RBI had commenced wholesale and retail CBDC pilots in November and December 2022, respectively.

The RBI top official outlined what its governor Shaktikanta Das has often spoken about: Using CBDCs to promote cross-border transaction. “This will be the biggest advantage of CBDCs,” Sankar said. The global cross border payment system is operated through correspondent banks, but they add inefficiencies. Only a few entities actually carry out transactions and the cost of the transaction is high as well.

The possibility of using crypto currencies towards cross-border transactions has been presented by some experts as an alternative channel as they increase transparency and improve security. Stablecoins is a crypto currency whose value is linked to an asset such as a US dollar. “We have to be careful here and need to push for CBDCs. Stablecoins are linked to currencies but are good only for the country to which the currency belongs…not for India,” Sankar said.

Also read: Explained: How a digital rupee can revolutionise cross-border payments

He called for the development of CBDCs in each country, which would ensure that through frameworks and global standards in place, each digital currency interface and talk with each other. “Cross border transactions will then be cheap and instantaneous,” Sankar said.

There are now 130 countries across the globe that are working towards launching CBDCs. This includes 32 countries in the development mode, another 46 doing research and 21, like India, carrying out CBDC pilots. Another 11 have already officially launched CBDCs.

State Bank of India Chairman Dinesh Kumar Khara called for more user experience from the rural areas. “The current pilots have no user experience from these regions,” he told the gathering.

Though being considered legal tender, RBI officials reiterated that a digital rupee would not earn any interest. Another issue which came up for discussion was whether in the future, as the acceptability of CBDC improves across the ecosystem, whether there would be a fall in the usage of physical currency notes.