G20 | Little focus on CBDC, but UPI attracting attention: RBI Deputy Governor Rabi Sankar

Countries from Africa, Latin America, and the Caribbean have shown interest in India's UPI. (Image: AP)

India’s success with Unified Payments Interface (UPI) has received a lot of attention from other nations during the ongoing G20 meetings, with some even expressing interest in taking advantage of the systems that the country has developed, Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar said.

However, central bank digital currencies (CBDC) have not been a big focus area in the discussions that have taken place so far.

“There was not much focus on CBDCs in the meeting. But what I can say is that developed countries’ thinking on CBDCs has changed in the last one year,” the deputy governor said on February 23 on the sidelines of the meeting of deputies of G20 finance ministers and central bank governors taking place in Bengaluru this week.

The deputies’ meeting, co-chaired by Economic Affair Secretary Ajay Seth and RBI Deputy Governor Michael Patra, took place ahead of the first meeting of the G20 finance ministers and central bank governors, scheduled for February 24-25.

On February 23, a deputy-level closed-door session was held on crypto assets. India is looking to build an international consensus on the regulation of these assets.

“I wouldn’t call it taking India’s help to build their infrastructure, although there is some interest in that as well,” Rabi Sankar said on the attention UPI is receiving. “We are talking to Commonwealth countries from the Caribbean, Africa, and South Pacific (who) are interested in actually using UPI and similar products. So for them it’s a question of developing the system and then linking it (to UPI).”

“The focus is on ensuring that people between the two countries can transact,” he further said, adding that India is interested in linking up with regions that see a heavy flow of remittances, such as UAE and Singapore, in addition to those which get a lot of Indian tourists.

Other interested countries include Indonesia, Thailand and some Latin America nations.

On February 21, the RBI and the Monetary Authority of Singapore announced the linking of UPI and PayNow – Singapore's fast payment system – to facilitate instant cross-border fund transfers.

The central banker also said UPI for non-resident Indians will be operationalised next week allowing them to make fund transfers using international phone numbers. The implementation of the facility has been delayed due to technical issues.

On the RBI’s experience so far with CBDCs, Rabi Sankar said the central bank hoped to increase the number of users of the retail CBDC, or digital rupee, by five lakh in the next three months.

The RBI launched the pilot project for the retail CBDC on December 1.

Regarding wholesale CBDCs, Rabi Sankar said the RBI wants “as many use-cases as possible”.

As part of the wholesale CBDC pilot project, launched on November 1, banks' treasuries buy and sell government securities in the secondary market using the digital currency.

“We are now looking at using a wholesale CBDC on distributed ledger for other use cases (which) could be call money, it could be money market transactions. Work is going on,” Rabi Sankar said.