Dilip Asbe, the Managing Director of the National Payments Corporation of India (NPCI), has hinted that the Reserve Bank of India, the RBI, is considering integrating CBDCs with digital payment infrastructure. This includes the likes of UPI to boost its adoption. Dilip said that the efforts are likely to drive the fintech wave.
The statement by Asbe came after the RBI Governor, Shaktikanta Das, announced new initiatives in the monetary policy meeting. It was held on February 8, 2024, and the RBI Governor proposed investing efforts to ensure that entities can derive specific benefits. For instance, government institutions can leverage the function to designate expenses like travel for their employees through payment.
Another proposal by Shaktikanta mentioned taking the functionality offline for users who reside in areas with poor internet connectivity. This development will build on the existing efficiency of CBDC and carry forward the implementation of the tokenization effort. The UPI mechanism is at the forefront, considering it handles a large number of transitions every year.
Just in 2023, UPI (Unified Payments Interface) executed more than 100 billion transactions. This marked a huge jump from 74 billion in 2022. The formation of such a ground has set the stage for 2024 to target a higher number.
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Sumit Gupta, the co-founder of CoinDCX, has appreciated the move, saying that it is a step in the direction of bridging the digital divide. It possibly translates to covering every member of the population, irrespective of their connectivity via the Internet. Sumit addresses the aspect of limited internet in some areas while calling for financial inclusion in the future.
Gupta expressed confidence in the integration of CBDC with payment infrastructure like UPI. CBDC is an acronym for Central Bank Digital Currency. They are also confident that NPCI is exploring UPI for more use cases, which will drive technological innovation for a more friendly and robust financial service system. Also, better exploration would help eliminate fraud and delays from the system as the entire financial aid reaches its rightful destination.
While government institutions can certainly leverage the advancement to designate expenses, the door would be open for every type of institution wishing to streamline and automate transactions like employee expenses.
He sought an opinion from the community, or rather followers on X. Most of them hailed the move, saying that it would indeed make withdrawals seamless. However, a section of the community refused to embrace the development. They cited the issue with CBDC as they believe it stands in the opposite direction of Bitcoin and other cryptos.
The fundamental issue in the community remains that cryptos stand for decentralization and financial freedom, while CBDCs don’t.
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It is only right to assume that the RBI has formerly categorized crypto and CBDC and is taking CBDCs forward in the most innovative way at the moment. Das and Asbe remain committed to the proposal, as Sumit studies if there is actually a second side he is undertaking unintentionally.
