T. Rabi Sankar's statement echoes the RBI's revelation in its annual report released earlier this month, where it said it would follow a "graded approach" to introduce the digital rupee.
Speaking at a webinar series organized by the IMF, RBI Deputy Governor T. Rabi Sankar stated that the Indian central bank believes CBDCs could kill private digital currencies.
In its annual report published recently, the Reserve Bank of India proposed a three-stage "graded approach" to introduce a central bank digital currency, including proof-of-concept, pilot, and launch.
Reserve Bank of India Governor Shaktikanta Das reminded that before the market crash, the RBI had been warning of the risks involved in investing in digital currencies, according to local reports.
The central bank says that digital currencies will seriously undermine its ability to determine monetary policy and contribute to money laundering and terrorism funding.
Investors and traders are bearing the strict regulations on digital currency in India—with some transferring their digital currencies to overseas wallets and opening accounts abroad.
Deputy Governor T. Rabi Sankar at the Reserve Bank of India likened digital currencies to Ponzi schemes and said banning them was the best course of action for the country.
India's Finance Minister Nirmala Sitharaman will read the budget on February 1, and many are hopeful that she'll talk digital currency regulations, but it's unlikely with elections on the way.
The department will promote innovation and aid policy interventions by the central bank while also overseeing the advancement of a digital rupee, according to the Reserve Bank of India.
A basic form of a digital rupee would provide a safe, robust, and convenient alternative to cash in liquidity and scalability, the Reserve Bank of India noted in its report.
India plans to launch its first digital rupee pilot in first quarter of fiscal year 2023, with the slow implementation giving the central bank more assurance.