India’s CBDC has 5M users, RBI in ‘no rush’ to launch it

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India’s central bank digital currency (CBDC) now boasts over 5 million users and 16 participating banks in the pilot phase, but the Reserve Bank of India (RBI) is in no rush to launch it publicly.

Governor Shaktikanta Das confirmed the CBDC user numbers in a speech in Bengaluru. While he says that CBDC could significantly impact financial inclusion and that the pilot has been a success, he clarified that the bank is taking its time before diving into a public launch, mirroring the approach taken by more advanced CBDC powerhouses like China.

India launched the wholesale CBDC pilot in November 2022 and, a month later, launched the retail version. Since then, it has focused its efforts on the pilot, which has attracted over 400,000 local merchants.

“It is important to emphasise that there should not be any rush to roll out system-wide CBDC before one acquires a comprehensive understanding of its impact on users, on monetary policy, on the financial system and on the economy. Such understanding would emerge from the generation of user data in pilots. Actual introduction of CBDC can be phased in gradually,” the governor said at an event celebrating its 90th anniversary.

For now, the top bank will keep experimenting with new features for the digital rupee. Currently, its testing offline payments and programmability, the governor revealed.

In India, internet penetration has steadily surged in recent years, with the latest reports revealing that over 800 million Indians are connected. However, with a population of 1.4 billion, a sizable segment has no internet access, making offline payments critical to the success of the digital rupee.

Programmability, on the other hand, diversifies the CBDC’s use cases. According to Das, in one of the pilots, financial institutions have been issuing farmers programmed loans whose funds can only be used to purchase predetermined farming inputs. This gave “the required comfort to banks and thus established the identity of a farmer not through his land holding but through the end use of funds being disbursed.”

The bank intends to trial features such as anonymous transactions in the future. In the past, Das has suggested that new laws could facilitate anonymity, such as permanently deleting transactions.

RBI still believes there’s a lot of potential in a digital rupee, which the governor says “has the potential to underpin the payment systems of the future, both for domestic payments and also cross-border payments.”

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