India’s central bank, the Reserve Bank of India (RBI), has said that it would implement its CBDC plans through a graded approach and as per the country’s monetary policy.
The introduction of CBDC, scheduled for the current 2022-23 fiscal, will be in sync with the financial stability and currency and payments systems, media reports said, attributing the information to an RBI report.
A Graded Approach
“The Reserve Bank proposes to adopt a graded approach to introduction of CBDC, going step by step through stages of Proof of Concept, pilots and the launch,” the RBI said in its Annual Report 2021-22, released last week.
A proof of concept is the initial stages of an idea where it is put to the test to verify if it can be implemented with the same result as intended.
“The Reserve Bank is engaged in the introduction of a central bank digital currency (CBDC) in India. The design of CBDC needs to be in conformity with the stated objectives of monetary policy, financial stability and efficient operations of currency and payment systems,” the report added.
Earlier, a senior RBI official claimed that Indian CBDC will be introduced separately for wholesale and retail segments.
India’s CBDC plans
In the Annual Budget 2022-23, Indian Finance Minister Nirmala Sitharaman promised to introduce the CBDC, pegged at par with the Indian rupee, in the financial year 2022-23. Indian CBDC or Digital Rupee will use blockchain and other related technologies.
Initially, the Indian government planned to bring a bill in the parliament that would ban cryptocurrencies and introduce an official digital coin or CBDC. It deferred the bill twice last year – first, in the budget session in February, and second, in the winter session in November.
Finally, it junked the idea of banning or regulating cryptocurrencies at the moment and instead amended the RBI Act, 1934, to provide a legal framework for the launch of the Digital Rupee or India’s CBDC.
Will Revolutionize Fintech: Indian PM
Following the budget proposals to introduce CBDC in the upcoming fiscal, Indian Prime Minister Narendra Modi in February 2022, said that he was looking forward to an Indian CBDC and it would strengthen the digital economy by revolutionizing India’s fintech industry.
“This will also lead to ease in development of global digital payment systems,” he opined.
The Indian Finance Minister also claimed that a CBDC would boost the local economy and bring efficiency to banking and payments systems.