After government securities, the Reserve Bank of India is planning to extend the use of Central Bank Digital Currency (CBDC) to call money market, an official said Tuesday. “RBI is now planning to go to interbank borrowing market (with CBDC), specifically call money market,” he said. RBI plans to use CBDCs as tokens for call money settlement, he said.
India’s CBDC is currently in a pilot phase across the retail and wholesale segments. The central bank has set a target of one million transactions a day by the end of 2023.
For settlement of government bond transactions the use of CBDC was allowed from November last year. For bonds, the CBDC was used in account format, he said while adding that in wholesale CBDC experimenting with technology is easier as the users and kinds of transactions are limited.
The official said that the number of CBDC transactions that were averaging 25,000 a day fell slightly in August as banks were busy managing its interoperability with the United Payments Interface. However, the effort to get to the target of 1 million transactions by December stays.
The CBDC started with pilots from November 1 last year from the wholesale segment and it was extended to retail a month later. The pilots are still continuing and there has been no end date put on them.
“The purpose of the pilot is to understand the benefits, the risks, the impact that it will have on bank deposits on monetary policy, on use of currency by people. To understand that we need to generate data as there are no examples anywhere in the world to fall back upon,” the official added.
The RBI is also making efforts to internationalise Rupay, UPI and other payment systems developed by India. There has been a lot of interest from many counties for UPI and Rupay cards and RBI and NPCI are at various stages of discussions and negotiations. Interest has come from beyond the countries that have traditionally been closer to India – like those in Latin America and Africa. “UPI should become a global product available in every country.”
Right now Singapore, United Arab Emirates, France, UK, Saudi Arabia, Bahrain, Maldives, Bhutan, Oman are the countries where Indians can pay using UPI.
Globally in card payments 2-3 players are dominant. RBI wants Rupay to be considered among them. Rupay should have all the facilities that other cards have. It should have more flexibility and one should be able to do more kinds of transactions using Rupay. Through other devices like smartphones and watches too. Work on enhancing the capabilities of Rupay shall continue.”
The official said at the G-20 summit on September 9-10 the RBI would put up on display five made in India financial innovations at its pavilion – Public Tech Platform for Frictionless Credit, CBDC, UPI One World, Rupay On-The-Go and Bharat Bill Payment System.
Under UPI One World the visitors will be boarded to UPI without having a bank account in India and they will get to experience the payment system. Rupay On-The-Go would allow customers to carry out contactless payment through accessories they wear – watch, ring or keychain.