Expanding India’s Digital Rupee: Aiming for One Million CBDC Users and Enhanced Offline Functionality

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India is ambitiously working on expanding its central bank digital currency (CBDC) user base, intending to reach one million users within three months. With over 100,000 users participating in the retail CBDC pilot since its launch in December 2022, the architects of the digital rupee are also focusing on improving its offline functionality to enhance financial inclusion.

Accelerating CBDC Adoption in India

The Reserve Bank of India (RBI) has set an ambitious target of scaling the digital rupee‘s user base to one million users. Initially, RBI officials stated a goal of 500,000 users by July, but sources suggest they are privately aiming to double that figure. With India’s massive population, insiders expect the one million user milestone to be attainable within three months.

The RBI is currently running both retail and wholesale CBDC pilots. The retail CBDC pilot, active in at least 15 cities, involves more than 13 participating banks. Launched on December 1, 2022, the digital rupee has attracted over 100,000 customers in the four months since its inception.

G-20 Praise for India’s Digital Rupee

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India’s digital rupee garnered attention and praise at a recent G-20 meeting hosted by the country in Bengaluru. RBI Governor Shaktikanta Das mentioned that an international finance expert commended the design of the CBDC, with the only missing element being the “smell of new currency.”

In 2023, the RBI initiated a Hackathon to address challenges surrounding the retail CBDC, including scalability, increasing transactions per second, and enabling offline transactions. Insiders note that achieving all three objectives is currently considered an “impossible trinity,” but they remain hopeful that technological innovations will soon provide solutions.

A digital currency system with offline transaction capabilities is seen as an essential step to improve financial inclusion in emerging economies like India. The RBI is exploring various methods to enable offline transactions, such as wearables, debit and credit cards, Bluetooth technology, and smartphones. Additionally, the RBI aims to address the risk of double spending.

Collaborating to Solve Offline Transaction Issues

Over 50 proposals were submitted to the RBI by the deadline of March 24, 2023, to tackle the challenge of offline transactions. While the RBI has been in discussions with private companies to improve scalability, no partnerships with prominent blockchain-related entities have been initiated yet.

The RBI has not announced an official timeline for the launch of a full-scale retail CBDC. However, previous indications suggest a rollout by the end of the year. As India moves towards its goal of one million CBDC users and improved offline functionality, it takes a significant step forward in fostering financial inclusion and digital currency innovation.

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