Why CBDCs Matter for India’s Financial Future

India is likely to establish mobile payment ties with other countries to improve cross-border payments, trade and remittances.

T. Rabi Sankar, Deputy Governor of the Reserve Bank of India, shared with Bloomberg that India is shaping its mobile payment infrastructure with many countries. Sankar announced at a conference in Cebu, Philippines that arrangements are already in place with Sri Lanka and talks are ongoing with the UAE and other neighboring countries. Sankar added that the country also has “some agreements” with Bhutan and Nepal.

The RBI is also working with ASEAN central banks to create a regional platform for instant cross-border payments. India has positioned itself as one of the leading countries using the technology of central bank digital currencies, commonly known as CBDCs. The RBI is currently investigating security measures regarding CBDC technology.

The Reserve Bank of India (RBI) has taken up cross-border payment efficiency as a key agenda at the G20 and has set up a committee such as the Payments and Market Infrastructures Committee.

Officials, including Sankar, talked about the many benefits CBDCs provide in terms of cross-border transactions and remittances. The RBI has suspended the public launch of India’s CBDC, Digital Rupee, as it monitors the impact. Sankar states that there is no rush to implement the project immediately. Additionally, the RBI has not announced a timeline for the launch of the digital rupee.

The road ahead for CBDCs

Raj Kapoor, founder and chairman of India Blockchain Alliance and a well-known technology innovator, educator and investor, offered his views on India’s progress in the digital space in an interview with crypto.news. “India’s initiative to establish mobile payment connections with other countries using CBDCs is impressive,” he said, weighing in on how blockchain and CBDCs can significantly improve cross-border financial systems.

“CBDCs will also have a clear advantage in trust and regulation. Since they are issued and supported by the RBI, they carry assurance of sovereign stability. They are also more likely to be widely adopted in India due to government support and integration into the existing financial ecosystem. They meet the needs of both businesses and individuals without the risks associated with cryptocurrencies, such as severe price fluctuations or legal uncertainties. “This is especially important in a country like India, where financial literacy varies widely.”

Raj Kapoor, Founder and CEO – India Blockchain Alliance

Another advantage of blockchain technology is that it eliminates all intermediaries for real-time payment, thus reducing international payment costs and delays. This will greatly benefit India’s large number of expatriates in terms of lower remittance costs and faster transfer times.

“We need to put our policy and a robust regulatory framework in place. If this does not happen, we will struggle and stammer. We’ve got all our ducks in a row and now it’s just a matter of when!”

This makes India’s CBDC an important step not only in improving domestic financial inclusion but also in transforming cross-border trade and payments. India’s commitment to improving cross-border payment systems could lead to closing gaps, building trust and accelerating India’s digital financial transformation.