CBDCs will bring a lot of opportunities for fintech community: RBI official

RBI will also organise sandboxes and hackathons to let fintech innovators present their solutions.

The Central Bank Digital Currency (CBDC) will provide numerous opportunities for India's fintech community to help the government and the Reserve Bank of India (RBI) in addressing technology challenges such as enabling CBDC transactions offline, preventing duplication of digital currencies, and preventing double payments, a senior RBI official said. This comes just a week after the Economic Survey 2023 emphasised the benefits of CBDC in expanding digital financial services.

RBI will also organise sandboxes and hackathons to let fintech innovators present their solutions.

Speaking at the Bharat Fintech Summit 2023, Anuj Ranjan, General Manager, fintech department, RBI said, “There is a lot of opportunity for the fintechs here. Presently, wallets are being given by the banks, it is synced with the digital currency to make payments. Going forward, we expect fintechs can do a lot to take care of the people in Bharat. There is no internet connectivity or even power to charge mobile phones.”

“The fintech community needs to come out with something through which offline transactions can be done. It can be a service provided to the bank to ensure that people who are not connected to the internet can transact in digital currency,” he added.

There are solutions to be found for other challenges like duplication of digital currency, risk of double payments using the same currency, and even new innovations around digital currency use cases and programmability, Ranjan said.

“There are a few concerns around CBDC in the offline environment including double spend and duplication of currency. If these two are addressed through hardware or public-private key it would be great. We need to ensure people do not use the same currency multiple times,” he said.

The RBI is currently piloting CBDCs in the wholesale and retail segments with a limited number of use cases.

“We are trying to digitise currency and digitalise the currency management system, which is the sole prerogative of the RBI,” Ranjan said.

The Economic Survey 2023 released last week highlighted that the CBDC will enable several use cases which will lead to a “reduction in operational costs involved in physical cash management, fostering financial inclusion, bringing resilience, efficiency, and innovation in the payments system, boosting innovation in cross-border payments space, and providing public with uses that any private virtual currencies can provide, without the associated risks.”