India’s Central Bank Digital Currency (CBDC) pilot program has garnered over 5 million users, with participation from 16 banks. Despite this success, Reserve Bank of India (RBI) Governor Shaktikanta Das emphasized the need for a cautious and gradual approach to rolling out a system-wide CBDC.
CBDC Pilot Program and Its Progress
Speaking at a conference in Bengaluru, Governor Das provided an update on India’s ongoing CBDC pilot. Since its launch, the retail CBDC initiative has steadily grown, achieving significant milestones, including reaching a million transactions in a single day by the end of 2023. However, Das did not specify the current number of daily transactions.
India’s plans for both retail and wholesale CBDCs were first announced during the Finance Minister’s budget speech in 2022. Following this, the RBI launched pilots for both versions by the end of that year. The pilot program’s growth indicates strong interest and potential for digital currency adoption in India, yet the RBI remains cautious.
A Gradual Approach to CBDC Implementation
Governor Das underscored the importance of not rushing into a full-scale rollout of the CBDC. He suggested that the introduction of a system-wide CBDC could be phased in gradually, allowing time to fully understand its implications on users, monetary policy, the financial system, and the broader economy.
“Actual introduction of CBDC can be phased in gradually,” Das stated. “It is important to emphasize that there should not be in any rush to roll out system-wide CBDC before one acquires a comprehensive understanding of its impact.”
This measured approach aligns with the RBI’s broader strategy, which has been exploring key features of CBDC, including offline payments and programmability, since early 2023. These features are seen as potential enablers for financial inclusion, particularly in targeted use cases such as providing farmers with programmable funds for agricultural purchases.
Future Prospects and Testing New Features
Governor Das also highlighted ongoing tests of CBDC features aimed at enhancing anonymity and offline availability. These new use cases are expected to be rolled out gradually, ensuring that each feature is thoroughly tested before broader implementation.
The programmability aspect of the CBDC is particularly promising. According to Das, it could significantly contribute to financial inclusion by ensuring that funds are delivered to the intended recipients, such as farmers receiving purpose-bound money for agricultural inputs or generating carbon credits.
