India Reserve Bank is gearing up to conduct a CBDC pilot with public banks and fintech firms
September 6, 2022 2:40 AM
The trial could pave the way for the introduction of a CBDC in India before the end of the current fiscal year, possibly in three stages. The U.S.-based FIS is reportedly involved.
Local publication Moneycontrol reported on September 5 that the Reserve Bank of India (RBI) is in discussions with fintech companies and state-controlled banks about a trial run of a central bank digital currency (CBDC). The trial could occur before the Reserve Bank of India formally introduces a CBDC during the current fiscal year, according to an unnamed public sector bank official quoted in the article.
One of the fintech companies that the RBI is consulting with is FIS, a financial services provider based in the United States. According to Moneycontrol, FIS senior director Julia Demidova confirmed, "FIS has had various engagements with the RBI [...] and, of course, our connected ecosystem could be stretched to the RBI to explore numerous CBDC opportunities."
On August 25th, FIS declared the availability of the CBDC Virtual Lab. As a conference and roundtable host, the company was already involved in the CBDC community.
State Bank of India, Punjab National Bank, Union Bank of India, and Bank of Baroda are all examples of public sector banks that the RBI has reportedly approached about taking part in the trial. At least half of those financial institutions are owned by the government.
The Reserve Bank of India (RBI) has hinted at phased CBDC implementation for some time, most recently saying that India would implement CBDC in three stages between 2022 and 2023. Nirmala Sitharaman, India's minister of finance, has praised the potential benefits of a CBDC for her country.
It has been suggested that India's real-time payment system, the Unified Payments Interface, is in competition with cryptocurrencies and, by extension, CBDCs. In addition, a representative from the Reserve Bank of India (RBI) said in June at an International Monetary Fund (IMF) conference, "We believe that central bank digital currencies (CBDCs) could actually be able to kill whatever little case that could be for private cryptocurrencies." The Reserve Bank of India (RBI) has long held a suspicious view of cryptocurrencies, and while buying and selling cryptocurrencies is not illegal in the country, new taxes introduced this year have stifled the market.