The Reserve Bank of India (RBI) is aiming to scale up the number of central bank digital currency (CBDC) transactions to one million per day by the end of 2023, Deputy Governor T Rabi Sankar said on Tuesday.
Currently, around 5,000-10,000 transactions are being done per day using retail CBDC (e₹-R) – the pilot for which was launched by the RBI in December last year.
Speaking at an event organised by the Indian Banks’ Association (IBA), Sankar said the RBI will soon begin interoperability of CBDC with unified payments interface (UPI).
“We will take advantage of the UPI network to increase transactions in CBDC. There will be one QR code and you can swipe the QR code using the CBDC app. If the merchant has a CBDC account, the payment will settle in the CBDC wallet. If the merchant does have a CBDC account, then there will be an option to make payment using UPI,” Sankar said.
At present there are 1.3 million customers and 0.3 million merchants using retail digital Rupee. There are 13 banks offering retail CBDC.
Sankar said all these 13 banks have partially rolled out interoperability where the QR code can be scanned using the CBDC app. By the end of this month, these lenders will offer full interoperability to CBDC customers for using UPI to make payments.
The RBI will also onboard the remaining 20-25 banks to offer interoperability to CBDC customers but it might take a little more time, he said.
Sankar said the biggest advantage the CDBC can provide is the cross border transactions.
He said one of the important aspects of CBDC is the anonymity, which is the defining feature of the currency.
The anonymity on CBDC can be provided using various technological choices, including killing transactions after a certain time period. However, these choices have to be backed legally, he said.
“No bank or central bank or system will kill a financial transaction unless it is legally provided,” Sankar said.
The RBI will discuss the anonymity on CBDC with the government, he said, adding that there is need to ensure that the feature is not inconsistent with the Prevention of Money Laundering Act (PMLA).