NEW DELHI: Can you pay someone digitally even if you don’t have access to the Internet? Well, the Reserve Bank of India (RBI) is exploring possibilities of designing India’s upcoming digital currency in such a way that it can be transacted even when you don’t have access to the Internet.
A senior official closely involved in the development of the digital currency confirmed to The New Indian.
Indian Institute of Technology (IIT), Kanpur is providing technical support to the RBI to design the blockchain technology-based currency.
“The RBI’s digital currency is a work in progress. There are some challenges on which deliberations are underway. One of the key challenges that we are facing is to find a way to enable the currency to transact even without the Internet,” the official said.
There is still a large number of the Indian population that does not possess smartphones. According to a study by Deloitte, more than 55 per cent of the population of India had a smartphone in 2021. This number is expected to rise to 1 billion by 2026.
“Even though the number of smartphone users is increasing rapidly, internet connection is a major challenge, particularly in remote and hilly areas,” the official said.
Even as the government is making all-around efforts to ensure internet connectivity in every nook and corner of the country through several schemes including BharatNet, it wants to launch a digital currency that does not require technical requirements and complexities.
All the private currencies development on blockchain currently require an active internet connection and a wallet.
The Central Bank Digital Currency (CBDC) or digital Rupee was announced by Union finance minister Nirmala Sitharaman during her Union Budget speech. It will be introduced in a gradual manner within the ongoing fiscal year, RBI Deputy Governor T Rabi Sankar said last week.
“The process of introduction of CBDC will be gradual so that there is no disruption in the financial and banking system,” he told reporters here.
In its annual report released last week, the RBI proposed to adopt a “graded approach” to the launch of the digital currency.
“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 Reserve Bank proposes to adopt a graded approach to the introduction of CBDC, going step by step through stages of Proof of Concept, pilots, and the launch,” it said.
Officials have suggested that ‘digital rupee’ would be numbered in units just like every fiat currency note has a unique number. The units issued by the RBI in the digital rupee would be included in the currency in circulation.
The sovereign electronic currency would be equivalent to fiat cash and could be exchanged one-to-one. It will appear on the central bank’s balance sheet as a liability (currency in circulation). It should be possible to exchange CBDCs for cash, write noted economists in a paper published by India Brand Equity Foundation (IBEF).