RBI Introduces New CBDC Updates for Offline Transactions

The Reserve Bank of India (RBI) has announced several updates related to the Central Bank Digital Currency (CBDC) which is also known as the Digital Rupee (e-Rupee) in today's RBI monetary policy meeting. These features will gradually be made available through the pilots. The RBI has released the CBDC, which is legal tender in the same manner as other central bank money but in a different format than paper (or polymer). It would show up as liabilities on a central bank's balance sheet. It is a sovereign currency in an electronic format. Since CBDC payments are final, the financial system's settlement risk is decreased.

Some of the key updates regarding CBDC are

• This feature will allow users to ensure that their payments are being made for defined benefits or specific expenditures. The users list includes bodies such as government agencies and corporations.
• It was also announced that the CBDC will soon support offline transactions in areas with limited or no internet connection. For this, multiple offline solutions, both proximity and non-proximity will be evaluated across rural, hilly, and urban areas.

“The CBDC Retail (CBDC-R) pilot currently enables Person to Person (P2P) and Person to Merchant (P2M) transactions using Digital Rupee wallets provided by pilot banks. It is now proposed to enable additional use cases using programmability and offline functionality. Programmability will permit users like, for instance, government agencies to ensure that payments are made for defined benefits. Similarly, corporates will be able to program specified expenditures like business travel for their employees. Additional features like validity periods or geographical areas within which CBDC may be used can also be programmed. Second, it is proposed to introduce an offline functionality in CBDC-R 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. These functionalities will be introduced through the pilots in a gradual manner,” said RBI Governor Shaktikanta Das during the Monetary Policy Committee review meeting.