Uptake in hilly, rural and urban areas with little or no internet connectivity could be boosted with the introduction of offline solutions.
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Reserve Bank of India (RBI) Governor Shaktikanta Das said the central bank will explore offline solutions to boost adoption of its central bank digital currency (CBDC) – the digital rupee – in remote areas of the country with limited internet.
Several offline solutions, including proximity and non-proximity-based solutions, will be evaluated in hilly, rural, and urban environments to achieve this aim, reported the government press body PTI.
“It is proposed to introduce offline functionality in CBDC-R to enable transactions in areas with poor or limited internet connectivity. These functionalities will be slowly introduced through the pilots,” said the RBI governor during the Monetary Policy Committee review meeting on Feb. 8.
On the programmability front, Das said that currently, the CBDC system enables person-to-person (P2P) and person-to-merchant (P2M) transactions using digital rupee wallets provided by pilot banks.
The plans for launching offline capabilities were first proposed in March 2023 when Ajay Kumar Choudhary, RBI’s executive director, said the central bank is looking to test CBDC’s potential for cross-border transactions and linkage with legacy systems in other countries.
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While the e-rupee is being tested for offline capabilities, other existing payment platforms, especially the very popular Unified Payments Interface (UPI), already offer offline possibilities. Siddharth Sogani, the CEO of the Indian blockchain analytic firm Crebaco, told Cointelegraph that the primary purpose of CBDCs is to increase money monitoring and eliminate cash from the system:
“We already have popular payment services with offline capabilities, especially UPI. The CBDCs align with the government’s vision to eliminate cash. Although CBDCs are an alternate solution, the primary purpose is to have a well-monitored monetary system.”
The RBI launched a pilot of its retail CBDC in December 2022 and achieved the target of having a million transactions per day in December 2023.
Both developing and advanced economies mostly share the motivation behind their CBDC projects — financial stability and cross-border payments efficiency. However, developing countries are more often driven by financial inclusion reasons.
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