RBI to permit non-bank payment system operators to offer CBDC wallets

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Anshika Kayastha

MUMBAI – Reserve Bank of India has proposed allowing non-bank payments system operators (PSOs) to offer CBDC (Central Bank Digital Currency) wallets in order to make CBDC-R (Retail) more accessible to a broader segment of users.

This is expected to enhance access and expand choices available to users apart from testing the resiliency of the CBDC platform to handle multi-channel transactions, the central bank said, adding that necessary changes will be made to the system to facilitate this.

“The significant advantage is that this will facilitate faster transactions, thereby solidifying CBDC’s position as a promising leader in the realm of the digital economy. Additionally, this will empower users with flexibility and ease and enhance the scaling of transactions using the CBDC platform,” said Rahul Jain – CFO, NTT DATA Payment Services India.

CBDC pilots in both the Retail and Wholesale segments are currently underway with more use-cases and more participating banks. Currently only banks are allowed to issue CBDC wallets under the pilot.

In January 2024, Governor Shaktikanta Das had said that RBI is no undue hurry to implement the CBDC full scale as it wants to ensure its safety, integrity and efficiency. RBI introduced the CBDC pilots in phases, with the pilot for the wholesale segment being launched in November 2022 and for the retail segment in December 2022.

Deputy Governor T Rabi Sankar, in the monetary policy conference, said that CBDC volumes have increased after making it interoperable and the transaction trend is shifting more towards P2M payments from P2P payments as more merchants are being onboarded.

As per latest data, CBDC-R is estimated to have 40 lakh users and 4 lakh merchants, taking the total number of participants to around 50 lakh. Further, a total of 2.2 crore transactions have been undertaken so far, he said.

CBDC-R transaction volumes had touched a peak of 10 lakh transactions per day in December 2023, following which volumes are expected to have settled slightly below this level. Sankar had earlier in February 2024 said that RBI has been working on issues pertaining to scalability of technology and banks being able to handle that scale.

“For higher adoption of CBDC, it is important that it is accessible and usable by diverse sections of our society. This will be further enhanced when customers have a wide array of CBDC wallets to choose from once non-bank payment system operators foray into this area. This move widens the playing field and can turn CBDC into a mainstream payment option in the foreseeable future,” said V. Balasubramanian, CEO, FSS Cash Tech.

In the last policy on February 8, RBI had proposed enabling additional use cases using programmability and offline functionality for CBDC. Sankar today said the first programmability use-case pilot has been launched today, which enables CBDC transfers to farmers. Further, more use cases are being developed, including offline operationability which has been developed and is currently being tested in a controlled user group and will be opened up for the public soon.