India to look at offline solutions to help CBDC adoption in rural areas

Reserve Bank of India Governor Shakhitikanta Das said the central bank will explore offline solutions to boost adoption of the Central Bank Digital Currency (CBCC) digital rupee in remote areas of the country with limited internet access.

The Press Trust of India reports that several offline solutions, including proximity and non-proximity based solutions, will be evaluated in hilly, rural and urban areas. At the February 8 Monetary Policy Committee review meeting, the RBI Governor said

It is planned to introduce offline functionality in CBCC-R to enable transactions in areas with poor or limited internet connectivity. These functions are gradually introduced through pilots.

On programmability, Das said the CBCC system currently enables person-to-person (P2P) and person-to-merchant (P2M) transactions using digital rupee wallets provided by pilot banks.

Plans to launch offline capabilities According to RBI Director General Ajay Kumar Choudhary in March 2023, the central bank is looking to examine CBDC's cross-border transactions and its linkages with legacy systems of other countries.

Related: Indian Women's Cricket League bans crypto ads and sponsors

While the offline capabilities of Digital Rupee are being tested, other payment platforms – notably the popular Unified Payments Interface (UPI) – already offer offline capabilities. Siddharth Sogani, CEO of an Indian blockchain analytics firm, told Cointelegraph that the main objective of CBCDCs is to enhance financial traceability and remove money from the system.

“We already have popular payment services with offline capabilities, especially UPI. CBCs are aligned with the government's vision to eliminate cash. Although CBCCs are an alternative solution, the main objective is to maintain a well-regulated financial system.

RBI started piloting the retail CBCC in December 2022 and achieved the target of one million daily transactions by December 2023.

Both developing and advanced economies largely share the motivation behind their CBCC projects: financial stability and cross-border payment efficiency. However, developing countries hope to increase financial inclusion through CBCCs.

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