E-rupee boost: RBI to enhance role of digital currency, allow non-bank operators to offer CBDC wallets

RBI Governor Shaktikanta Das, has indicated the central bank’s interest in enhancing the scope of Central Bank Digital Currency (CBDC), in other words, e-rupee.

In his statement released today, the Reserve Bank of India (RBI) Governor, Shaktikanta Das, has indicated the central bank’s interest in enhancing the scope of digital currency (Central Bank Digital Currency-CBDC) in India. Digital currency in this instance refers to the e-rupee. The RBI Governor said the central bank was looking to promote CBDC and that too by enhacing its scope through Non-bank Payment System Operators and thereby boost retail use.

The RBI Governor Shaktikanta Das said the central bank was looking to promote CBDC.(PTI)

According to the statement released by RBI, “The CBDC pilots are currently in operation with increasing number of use-cases and participating banks. It is proposed to make CBDC-Retail accessible to a broader segment of users by enabling non-bank payment system operators to offer CBDC wallets.”

While this will increase usage, it will also likely be used to test the the resiliency of CBDC platform to handle multi-channel transactions.

According to the RBI, the use of non-bank payment system operators, which will include third-party payment app providers, will make the e-rupee more accessible to retail users.

Who will these non-bank entities be?

The central bank digital currency (CBDC) was rolled out in 2023, but RBI only allowed banks to offer these tokens and as such found only limited use as the process was quite restrictive and transaction volumes never reached any kind of high.

Now, RBI may well be eyeing non-bank payment system operators like PhonePe, Google Pay and Paytm, to offer the e-rupee through CBDC wallets, Reuters indicated.

"This is expected to enhance access and expand choices available to users apart from testing the resiliency of the CBDC platform to handle multi-channel transactions," the RBI said in its Statement on Developmental and Regulatory Policies.

Widening e-Rupee base

India's e-rupee programme is directed at promoting a digital alternative to physical cash and to boost transactions, the RBI has looked to widen its usage, and for that, even linked it to Unified Payment Interface (UPI).

According to a Reuters report, some banks used the e-rupee to roll out benefits to some employees in December.