RBI proposes additional use cases for CBDC pilot

Pilot of CBDC

The Reserve Bank of India (RBI) on February 8 proposed additional use cases for Central Bank Digital Currency (CBDC) pilot projects.

“It is now proposed to enable additional use cases using programmability and offline functionality,” RBI Governor Shaktikanta Das said while announcing the policy decision.

The programmability will permit users like government agencies to ensure that payments are made for defined benefits.

Similarly, corporates will be able to programmed specified expenditures like business travel for their employees.

For the latest on the RBI policy meet 2024, click here.

Additional features like validity period or geographical areas within which CDBC may be used can also be programmed.

The central bank also proposed to introduce an offline functionality in retail CBDC for enabling transactions in areas with poor or limited internet connectivity.

Multiple offline solutions (proximity and non-proximity based) across hilly
areas, rural and urban locations will be tested for this purpose, the central bank said.

The RBI launched the wholesale pilot of CBDC on November 1, 2022, to settle trades of G-Secs using the digital rupee.

In the pilot stage, nine banks, viz., State Bank of India (SBI), Bank of Baroda (BoB), Union Bank of India (UBI), HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank, and HSBC, have been identified for participation.

In December, 2022, the central bank started the retail pilot of digital currency.

As expected, the RBI held the key repo rate, the rate at which it lends funds to banks, steady at 6.5 percent.