The Reserve Bank of India (RBI) is considering several offline solutions for the central bank digital currency (CBDC) to enhance the use of the digital rupee in remote areas of the country with limited internet connection.
Shaktikanta Das, RBI Governor, said that the central bank will explore the possibility of introducing offline payments in the digital rupee project. The initiative aims to make the CBDC accessible in hilly, rural, and urban areas with limited internet connection.
The RBI is exploring offline solutions and considering their possible implementation. The RBI representatives discussed developing offline payment capabilities using the digital rupee in March 2023. However, since then, there were no updates on the matter.
According to Das, the authority plans to set up a programmable system that enables digital rupee wallets for person-to-person (P2P) and person-to-merchant (P2M) transactions. Local banks participating in the CBDC pilot project will act as intermediaries for these transactions.
While the RBI is exploring the possibility of introducing offline payments, third-party solutions for offline payments are gaining popularity in India. In particular, the Unified Payments Interface (UPI) provider is the top-rated one. According to Siddharth Sogani, CEO at analytical company Crebaco, the Indian government aims to provide a well-monitored monetary system in the country with the help of the CBDC.
The Bank for International Settlements (BIS) explored the risks of offline payments in CBDCs and discovered that digital currencies can be used for fraud and violate user privacy.