The Reserve Bank of India (RBI).
Credit: Reuters File Photo
The Reserve Bank of India (RBI) is considering introducing offline usage features in the Central Bank Digital Currency (CBDC), which is widely pitched as an alternative to cryptocurrencies.
According to RBI sources, the offline features would help in providing “resiliency and availability in the absence of network and programmability.” The offline digital rupee would enable transactions without the internet. It will be done through a device that offers offline functionality. It could either be a stand-alone custom device or a smartphone with a built-in application.
The offline digital payment systems could verify availability of funds and validate transactions without the need to check in with an online ledger.
The RBI’s Central Bank Digital Currency (CBDC) is still in a pilot phase. The pilots for digital currency that started in November last year, have been successful in testing the legal, operational and technical preparedness as well as accounting treatments required for the issuance of digital currency.
It has also helped in understanding the user and merchant behaviour and requirements. “Based on the experience gained, different use cases and technical architecture will be tested in future pilots,” the RBI sources said.
The pilot started with four cities and four banks and has now been expanded to include thirteen banks and twenty-six locations and has more than 1.75 million users and merchants. The pilots commenced on November 1, 2022 for wholesale digital currency, while for retail it started on December 1, 2022.
The Central Bank Digital Currency or Digital Rupee is the digital form of India’s currency, the Rupee. It is akin to sovereign paper currency but takes a different form and is exchangeable at par with the existing currency, the Rupee.
To showcase India’s progress in digital payments, the RBI plans to set up an exhibition pavilion at the G20 Leaders’ Summit held in the national capital this weekend.
“We will be showcasing an informational video on the RBI’s Digital Rupee and its journey,” a RBI source said.
“The live Digital Rupee transactions will be demonstrated by select banks which are participating in the pilot,” he added.
On the launch of digital rupee, the source said, “the RBI is presently engaged in working towards a phased implementation strategy before a decision on the final launch is taken.”