RBI Suggests Introducing Central Bank Digital Currency In Graded Approach

The Reserve Bank of India (RBI) said on Friday, May 27, that it has taken a graded approach to launching Central Bank Digital Currency (CBDC) in India to ensure that the move is consistent with monetary policy and financial stability objectives.

The RBI has been studying the benefits and drawbacks of implementing CBDC in India. RBI is now looking into the suitable design components of CBDCs that might be introduced with little or no impact.

The RBI stated in its Annual Report 2021-22 released on Friday that it is engaged in the launch of the CBDC and is progressing through various stages.

In order to increase the country's digital banking penetration, the RBI announced it will help put up 75 digital banking units in 75 districts between 2022-23.

India's CBDC project was announced by Finance Minister Nirmala Sitharaman in the Union Budget 2022 in February of this year. During the announcement, Sitharaman stated that the CBDC would provide a "significant boost to the digital economy" and that the RBI will design the CBDC on its own.

"It will also work towards ensuring execution of key projects of importance through the Reserve Bank Innovation Hub (RBIH) during the year while finalising its vision, mission and strategy documents and a policy framework for digital banking and fintechs," the report said.

The RBI said it will keep working to improve the regulatory ecosystem for customer protection, including upgrading and providing easy and quick access to the grievance redress mechanism, as well as spreading customer awareness and financial education to underserved groups and remote areas of the country.