The issue of easing cross-border payments is a priority area for India’s G20 presidency and adoption of central bank digital currencies (CBDC) by global banks could make such payment transactions faster, cheaper and more secure, Reserve Bank of India (RBI) Governor Shaktikanta Das said at the G20 Tech Sprint Finale held here today.
“Notwithstanding the progress made so far, the key challenges to existing cross border payments continue to be high cost, low speed, limited access and insufficient transparency,” Das said, adding that faster, cheaper, more transparent, and more inclusive cross-border payment services would deliver widespread benefits to individuals and economies worldwide. It will also support economic growth, international trade and financial inclusion.
Das said that several central banks globally are considering introduction of CBDCs and are taking steps in the direction. India, for one, is among the few countries which have launched CBDC pilots in both wholesale and retail segments. Slowly, Das said, the pilot is being extended to more banks, more cities, more people and more use cases.
“The empirical data that we are generating would go a long way in shaping the policies and future course of action. With its instant settlement feature, I believe, CBDCs can play an important role in making cross-border payments cheaper, faster and more secure,” the Governor said.
The Reserve Bank of India (RBI) had launched a pilot CBDC programme in late 2022. Speaking at the sidelines of the G20 tech sprint event today, RBI deputy governor T Rabi Sankar said that banks are on track to register at least one million CBDC transactions per day by the end of current calendar year. During July, Sankar said about 5,000 CBDC retail transactions were taking place each day.
To further the adoption of CBDCs, eight banks have till now enabled Unified Payments Interface (UPI) QR code operability with CBDC payments. These lenders include State Bank of India, Bank of Baroda, Canara Bank, HDFC Bank, Axis Bank, Kotak Mahindra Bank, IDFC First Bank and YES Bank.
Further, Governor Das said that UPI has been a “game-changer” for India’s digital payments ecosystem as over 10 billion UPI transactions were registered in the month of August alone. Today, there are more than 70 mobile apps and more than 50 million merchants who accept UPI payments, he added.