Central Bank Governor Shaktikanta Das highlighted the importance of prioritizing regions with limited internet connectivity. He shared that the RBI will study and implement solutions that facilitate offline payments using the state digital currency (CBDC).
“The introduction of offline functionality in CBDC-R is being proposed so that individuals can conduct digital rupee transactions even in hard-to-reach areas. These features will be gradually introduced through extensive testing,” assured Governor Das.
The programmability system of the state stablecoin allows for peer-to-peer transactions (P2P) as well as settlements between individuals and sellers (P2M). These transactions are facilitated through digital rupee wallets provided by participating banks in the pilot project.
Offline digital rupee payments were initially introduced in March 2023. Ajay Kumar Choudhary, Executive Director of RBI, mentioned that the Central Bank aims to test CBDC’s potential for international payments with countries that still rely on traditional payment systems. Siddharth Sogani, CEO of Crebaco, a blockchain analytics company in India, believes that tracking financial movements is a key objective of CBDC.
“We already have popular payment services, such as UPI, that enable offline payments. The government may be looking to reduce cash dependency through CBDC. While CBDC has the potential to serve as an alternative to traditional money, its primary purpose is to establish a well-regulated monetary system,” explained Sogani.
In November 2022, the RBI initiated testing of the digital rupee in the wholesale sector, followed by the retail sector in December 2022. Deputy Governor of RBI, T. T Rabi Sankar, previously mentioned that the Central Bank’s digital currencies could potentially replace private cryptocurrencies.