RBI to Extend Access of CBDC-R to Non-Bank Payment System Operators

In a move aimed at democratizing digital currency access, the Reserve Bank of India (RBI) has put forth a proposal to broaden the accessibility of CBDC-Retail (CBDC-R) by allowing non-bank payment system operators to offer CBDC wallets. This significant development is poised to revolutionize the digital payments landscape, providing a wider population with the opportunity to engage with Central Bank Digital Currency (CBDC).

The proposal encompasses third-party payment applications such as PhonePe and Google Pay, positioning them to play a pivotal role in facilitating CBDC transactions for users across diverse segments of society. By leveraging the expansive reach and user base of these non-bank payment system operators, the RBI aims to enhance access and expand choices available to users, thereby promoting financial inclusion and fostering innovation in the digital payments ecosystem.

V. Balasubramanian, CEO of FSS Cash Tech, lauded the move, emphasizing the importance of accessibility and usability in driving CBDC adoption. He noted that the proliferation of CBDC wallets through non-bank payment system operators would democratize access to digital currency and position CBDC as a mainstream payment option in the foreseeable future.

The RBI’s initiative builds upon the CBDC pilot program launched in 2022, which introduced the Indian CBDC, also known as Digital Rupee. The ongoing pilots for CBDC Wholesale and Retail segments have witnessed increasing participation from banks, with the aim of testing system resilience and exploring various transactional avenues.

During a recent post-policy press meet, Deputy Governor T Rabi Sankar provided insights into the evolving CBDC landscape, highlighting shifts in transaction volumes and emerging use cases. Sankar noted a visible shift from peer-to-peer (P2P) to peer-to-merchant (P2M) transactions, indicating growing merchant participation in the CBDC ecosystem.

Furthermore, the RBI is exploring additional functionalities for CBDC retail payments, including programmability and offline capability. Programmability is expected to enable transactions for specific purposes, while offline functionality will facilitate transactions in areas with limited internet connectivity. The implementation of interoperability between CBDC and the United Payments Interface (UPI) has further bolstered CBDC volumes, driving its adoption across diverse user segments.

As the RBI continues to spearhead efforts to enhance the accessibility and functionality of CBDC-R, stakeholders anticipate a transformative impact on India’s digital payments landscape. With a focus on promoting financial inclusion and innovation, the expansion of CBDC access to non-bank payment system operators heralds a new era of digital currency adoption and empowerment for millions of users nationwide.