Reserve Bank of India Governor Shaktikanta Das said while currently there is preference for UPI (Unified Payments Interface) among retail users, the advantages of retail CBDCs (central bank digital currencies) will be more visible once they are enabled for offline use.

“UPI is now witnessing about 13 billion transactions every month. Despite this very impressive progress, there is still considerable scope for increase in digitalisation of payments.

“This can be facilitated through CBDC, which has the same advantages of cash–anonymity, ease of usage and finality of settlement,” Das said on Monday at the BIS Innovation Summit.

Cross-border payments

Specifically, in the context of cross-border payments, the feature of settlement finality can substantially reduce the cost of transactions.

In India, the retail pilot, which kicked off on December 1, 2022, uses token-based CBDC on a blockchain and enables both merchant payments (P2M) and person-to-person (P2P) payments.

Das said the retail pilot is expected to create familiarity with CBDC, which has features of both cash and digital instruments.


“We have leveraged the existing merchant infrastructure on the UPI to facilitate CBDC transactions. We have also enabled interoperability of CBDC with UPI.

“While the number of (CBDC) transactions have reached a high of 1 million a day, we still see preference for UPI among the retail users. We, of course, hope that this will change going forward,” the Governor said.

He noted that a key objective of the CBDC pilots has been to study the change in consumer behaviour vis-a-vis bank deposits.

“We need many more transactions to understand its wider economic effects, especially on monetary policy and the banking system.

“We have envisaged our CBDC as non-remunerative by making it non-interest bearing. This features should mitigate any potential risk of bank disintermediation,” he said.

Wholesale CBDC

Das observed that the wholesale CBDC pilot, which commenced on November 1, 2022, is currently focussed on (settlement of) Government securities transactions using centralised ledger and overnight call money transactions between banks using distributed ledger.

He emphasised that the basic objective of the wholesale pilot is to mimic the settlement efficiency of cash as it removes the need for central counterparties, settlement guarantee infrastructure, or the need for collateral.

“Wholesale CBDCs can help in better monitoring of transactions from risk perspective by moving to delivery versus payment (DvP) 1 method wherein both the cash leg and the securities leg of a transaction are settled on a gross basis as against the present DvP 3 mode where both legs of a transaction are settled on a net basis.

“Now, going forward, other instruments such as commercial papers and certificates of deposit will be tried out in the wholesale CBDC pilot along with securities tokenisation features,” he said.