According to The Economic Times (ET), the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) are strategically targeting offline and feature phone-based payments, as well as purpose-defined transactions, to drive the adoption of the central bank-backed digital currency (CBDC).
Both the RBI and the NPCI share the goal of streamlining CBDC usage and making digital payments as simple as traditional cash transactions. To that purpose, the RBI has created a sandbox for startups to test various CBDC use cases. Despite original predictions that daily transactions would exceed a million by the end of the year, current levels are in the tens of thousands.
According to ET, the issue is that CBDC does not provide a significant benefit over existing Unified Payments Interface (UPI) transactions, which is preventing widespread client adoption. Furthermore, for feature phone users, UPI 123PAY provides for rapid and safe payments by dialing an interactive voice response (IVR) number.
Despite the UPI interface's widespread adoption, industry insiders predict a boom in CBDC usage if creative use cases emerge. CBDC's programmability allows for direct benefit transfers, targeted cash disbursements, or even distributing pocket money for specific reasons such as canteen expenses for children.
According to Neeraj Singh, co-founder of Xaults, the present issue is that banks lack the appropriate infrastructure to produce CBDC-based products. Industry participants anticipate a proliferation of various use cases as banking capabilities expand in the future, encouraging widespread use of CBDC wallets.
