The Reserve Bank of India (RBI) is looking to expand its cross-border payments platform that enables instant payments by adding new trading partners in Asia and the Middle East.
According to Bloomberg, India already has agreements in place with neighbors Sri Lanka, Bhutan and Nepal and is planning to add the United Arab Emirates (UAE) to its cross-border settlement program.
India is also exploring the use of Central Bank Digital Currency (CBDC) as a primary payment mechanism within cross-border payment solutions.
The Reserve Bank of India’s CBDC is currently an interbank solution, but it is not a widely adopted consumer-facing central bank digital currency. However, the bank could expand CBDCs to include most retail consumers in the future, but did not provide a timeline for mass retail CBDCs.
Different stages of CBDC development around the world. source: atlantic council
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CBDC development in India
India is one of the biggest supporters of CBDCs globally, along with BRICS members China and Russia. India began exploring the possibility of CBDC payments in 2020, and in 2022, the Reserve Bank of India began testing CBDC development through a pilot program.
In February 2024, Reserve Bank of India Governor Shaktikanta Das said the bank was working on offline solutions for the digital rupee to encourage CBDC use in many rural areas of India without strong online connectivity.
India later announced that it had secured around 5 million users for its digital rupee pilot program in August 2024. Addressing the Global Conference on Digital Public Infrastructure and Emerging Technologies, Shri Shaktikanta Das announced the Digital Rupee Pilot Program as a standardized, system-wide CBDC for the Indian population.
At the conference, Das also revealed plans to further increase the interoperability of sovereign CBDC schemes by adopting a “plug and play” system to enable seamless and efficient transactions between different systems.
The push to develop a central bank digital currency has drawn heavy criticism from privacy advocates, human rights activists and freedom-seeking individuals. Critics say the risks of centrally controlled digital ledgers and their potential for abuse by governments far outweigh the costs or efficiency benefits.
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