India will likely establish mobile payment ties with other countries to improve cross-border payments, trades, and remittances through CBDCs.
Deputy Governor of Reserve Bank of India, T. Rabi Sankar, shared that India is shaping up its mobile payment infrastructure with several countries, with Bloomberg. Sankar further elaborated that arrangements are already in place with Sri Lanka and that talks are going on with the UAE and other neighboring nations at a conference in Cebu, Philippines. Sankar added that the country also has “some arrangements” 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 nations piloting the technology of Central Bank Digital Currencies, commonly known as CBDCs.
The RBI took up cross-border payment efficiency as an important agenda in its G20 meeting and set up a committee called the Committee on Payments and Market Infrastructures to usher in developments on CBDCs. Now, it is looking into security measures regarding the CBDC technology as difficulties like Anti-Money Laundering and Combating the Financing of Terrorism compliance are important to resolve.
Officials, including Sankar, have mentioned several benefits that CBDCs provide in terms of cross-border transactions and remittances. The RBI has put the public launch of India’s CBDC, the Digital Rupee, on hold as it observes the impact. Sankar mentions that there is no hurry to launch it immediately. In addition, the RBI has not announced a timeline for the release date of the digital rupee.
The road ahead for CBDCs
In a conversation with crypto.news, Raj Kapoor, who is the founder and chairman of the India Blockchain Alliance and a well-known tech innovator, educator, and investor, offered his views on India’s progress in the digital realm. He mentioned, “India’s initiative to establish mobile-payment connections with other countries using CBDCs is impressive,” weighing on how blockchain and CBDCs could significantly improve cross-border financial systems.
“CBDCs will also have a clear advantage in trust and regulation. As they are issued and backed by the RBI, they carry the assurance of sovereign stability. They are also more likely to gain widespread adoption in India due to government support and their integration into the existing financial ecosystem. They address the needs of both businesses and individuals without the risks associated with cryptocurrencies, such as drastic price fluctuations or legal uncertainties. This is particularly important in a country like India, where financial literacy varies widely.”
Raj Kapoor, Founder & CEO – India Blockchain Alliance
The other advantage of blockchain technology is that it bypasses all intermediaries for real-time settlement, thus reducing international payment costs and delays. This will massively benefit India’s large number of expats in terms of lower remittance costs and quicker transfer times.
“We need to have our policy and a robust regulatory framework in place. Without that, we shall flounder and stutter. We have all the ducks lined up, and it’s now a question of when!”
This makes India’s CBDC a momentous stride not only for improving domestic financial inclusion but also toward a leap in changing cross-border trade and payments. India’s dedication to improving its cross-border payment systems can lead to gaps-closure, trust-building, and speeding up India’s digital financial transformation.
