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RBI: Now you can use Digital Rupee without internet


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India’s Reserve Bank (RBI) is working on a Digital Rupee, part of the Central Bank Digital Currency (CBDC) initiative. This digital currency is like regular money but in electronic form. RBI plans to enhance its features and make it usable even without internet connectivity. Let’s delve into the details.

Offline Transactions Support: Enhancing Accessibility

RBI aims to make Digital Rupee usable in areas with limited or no internet access. This will allow people to make payments even when they’re not connected to the internet.

Testing Various Solutions: Pilot Programs in Different Settings

Governor Shaktikanta Das announced that RBI will test different offline solutions in hilly, rural, and urban areas to ensure the effectiveness of the system in diverse settings.

Current Pilot Program: Person-to-Person and Person-to-Merchant Transactions

The ongoing CBDC-R (retail) pilot enables transactions between individuals (P2P) and from individuals to merchants (P2M) using Digital Rupee wallets provided by participating banks.

Future Enhancements: Programmability and Offline Functionality

RBI plans to introduce programmability features, allowing users like government agencies and businesses to manage payments for specific purposes, such as employee expenses or benefits. Offline functionality will also be added gradually.

CBDCs and Their Importance: Comparable to Cash

CBDCs are official digital currencies issued by central banks and hold the same value and credibility as physical cash. Payments made using CBDCs, like Digital Rupee, are final and direct, similar to exchanging physical cash.

Advantages Over Traditional Digital Payments

Unlike digital payments through channels like UPI and net banking, which rely on bank balances and various technical factors, CBDC payments reduce settlement risk within the financial system. This makes CBDC transactions more efficient and cost-effective.

Cross-Border Transactions Simplified

RBI highlights the potential for CBDCs to simplify cross-border transactions. For instance, an Indian importer could pay an American exporter in real-time using digital dollars without intermediaries, similar to handing over physical cash.

In summary, RBI’s initiatives with Digital Rupee and CBDCs aim to enhance accessibility, efficiency, and security in the Indian financial system, benefiting individuals, businesses, and the economy as a whole.

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