Expansion in rural and urban areas with minimal or no internet connectivity could be supported by the implementation of offline solutions.
Introducing Offline Features to Support Digital Rupee
Governor of the Reserve Bank of India (RBI) Shaktikanta Das announced that the central bank will explore offline solutions to support the adoption of its central bank digital currency (CBDC), the digital rupee, particularly in remote areas with limited internet access.
Plans for Offline Feature Implementation
As part of this initiative, various offline solutions for hilly, rural, and urban environments, including proximity-based and non-proximity-based solutions, will be considered, as reported by the Press Trust of India. During the monetary policy review on February 8, the RBI governor stated:
"We propose to introduce an offline function in CBDC-R, which will enable transactions in areas with poor or limited internet connectivity. These functions will be gradually introduced through pilot programs."
Offline Features and Future Plans
Plans to implement offline features were first introduced in March 2023, when Ajay Kumar Choudhary, RBI's Executive Director, stated that the central bank is exploring CBDC possibilities for cross-border transactions and integration with older systems in other countries.
Objectives and Vision of CBDC in India
While the digital rupee is undergoing testing for offline capabilities, other payment methods such as the popular Unified Payments Interface (UPI) already offer offline options. Siddharth Sogani, CEO of the Indian blockchain analytics firm Crebaco, emphasized that the primary goal of CBDC is to increase money monitoring and eliminate cash from the system.
Conclusion
RBI launched the pilot operation of its retail CBDC in December 2022 and achieved the goal of one million transactions per day in December 2023. Both developing and developed economies share the motivation behind their CBDC projects: financial stability and the efficiency of cross-border payments. However, developing countries also hope that CBDC will strengthen financial inclusion.
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