India’s central bank has set up a new department to focus on all matters related to financial technology (fintech) in the country. The department will promote innovation in the sector while also overseeing the development and launch of a digital rupee.
In a circular, the Reserve Bank of India (RBI) announced that creating a new department is necessary due to the fast progress in the sector and a need to keep pace with the developments in the field.
“With a view to give further focus to the area and innovation in the fintech sector in keeping pace with the dynamically changing landscape, it was decided to set up a fintech department in the bank,” the circular stated.
The fintech unit was first established in 2018, but it was set up under the Department of Regulation and tasked with being a central point of contact in the RBI for all issues related to financial technology. It was then transferred to the Department of Payment and Settlement Systems in 2020 before finally being spun out as an independent unit this year.
“The Department will not only promote innovation in the sector, but also identify the challenges and opportunities associated with it and address them in a timely manner,” the RBI notes in its circular. It also expects the new department to provide a framework for further research on the subject that can aid policy interventions by the RBI.
The RBI has appointed Shri Ajay Kumar Choudhary to head the new department. Kumar comes with three decades worth of experience in supervision, regulation, payments and settlements, and currency management.
According to sources within the bank, the appointment of Kumar to head the fintech department could have a significant impact on the RBI’s development of a digital rupee. As CoinGeek reported, the RBI recently revealed that it would pursue a basic version of its central bank digital currency (CBDC) as it would be a safer and more robust alternative. The bank expects to kick off its first pilot in 2023.
“You can expect much more action from Mr. Ajay Kumar Choudhary towards the central bank digital currency. This may signify a shift from the RBI’s stance towards fast-tracking CBDC piloting,” one source told a media outlet.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
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