Shaktikanta Das, the governor of India’s central bank, has said recently that their Central Bank Digital Currency (CBDC) has amassed more than 5 million users. However, there should be no rush to implement a system-wide CBDC. The chief official of the Reserve Bank of India spoke recently at a conference in Bengaluru on Monday. 

India’s plans for a retail and wholesale CBDC were unveiled by the Finance Minister’s 2022 budget speech. By the end of 2022, the RBI had launched pilots for both types of CBDCs. By the close of 2023, the retail CBDC reached a milestone of a million transactions in a single day, thanks to the support from partner banks. Das mentioned that 16 banks are currently involved in the retail CBDC pilot but did not disclose the daily transaction numbers. 

The practical implementation of cross-border digital currency interoperability will present challenges and may require certain trade-offs, Reserve Bank of India Governor Shaktikanta Das stated on Monday. He mentioned that while technical barriers could be overcome by adopting common international standards, the governance structure or management framework for long-term sustainability would also need to be established. 

The RBI has previously stated that it is currently not rushing to implement a full-scale retail CBDC and has not provided a timeline. However, during this time Das suggested the possibility of forgoing a full-scale rollout. “Actual introduction of CBDC can be phased in gradually,” Das said. “It is important to emphasize that there should not be in any rush to roll out system-wide CBDC before one acquires a comprehensive understanding of its impact on users, on monetary policy, on the financial system and on the economy.” 

“The programmability feature of CBDC could serve as a key enabler for financial inclusion by ensuring delivery of funds to the targeted user,” Das said while pointing to two use cases involving farmers launched as part of their pilot recently; Programming the end use for purchase of agricultural inputs to comfort banks and establish the farmer’s identity; farmers getting purpose bound money for generation of carbon credits. 

The Governor also highlighted recent advancements such as offline payments and programmability, both of which could help to hugely boost financial inclusion. He also touched on anonymity, likely in relation to small transactions. 

The central bank is currently advancing several different technology initiatives, the most recent being the Unified Lending Interface (ULI), a platform that is designed to streamline the credit granting process with minimal friction. This name closely resembles that of its faster payment system, the Unified Payment Interface (UPI). 

Interestingly, India’s significant contribution to the BIS’s work on tokenization raises the question of whether the naming of its shared ledger project as a ‘Unified Ledger’ is a coincidence or a deliberate choice. 

As the RBI continues to explore new use cases and tune the CBDC for its betterment, it is clearly evident that India is leading the way in CBDC development. The country’s careful yet forward-thinking approach promises a bright future for digital currencies and their ability to revolutionize financial services.