RBI working on phased implementation of digital currency

New Delhi: The Reserve Bank of India (RBI) is working on a phased implementation of the Central Bank Digital Currency (CBDC) in both wholesale and retail segments, Ajay Kumar Choudhary, Executive Director, RBI, said on Wednesday.

Addressing an event organised by industry body FICCI, Choudhary said that with the announcement of Central Bank Digital Currency (CBDC) in the Union Budget, necessary amendment to the relevant section of the RBI Act 1934 had been made enabling RBI to conduct pilot and subsequent issuance of CBDC. “RBI is also working on phased implementation of a Central Bank Digital Currency in both wholesale and retail segment,” he added.

Choudhary said that the Indian Fintech market currently stands as a third largest Fintech ecosystem in the world, just behind US and China.

“In the next five years, the Indian fintech sector is expected to grow with a cumulative annual growth rate of around 22 per cent. Today, the world is looking up to India, as we continue to innovate and lead the way seamlessly imbibing the new age technology without compromising on the safety and security aspects,” he said.

Choudhary also emphasised that as a regulator, it is also important for RBI to identify the risks and challenges associated with all innovations. Central bank has taken several measures to foster innovation in the fintech sector which includes regulatory sandbox, Reserve Bank Innovation hub, etc. “Sustainability is the most critical aspect in fintech sector.

RBI has constituted a committee to both examine and suggest measures to address the risks and challenges associated with the fintech eco-system while continue to foster innovation,” he said.

Speaking on the opportunities in the fintech sector, Choudhary said that the sector will continue to have responsible innovations which will transform the financial landscape of the country. The growth does not have to be only swift but a sustainable growth and inclusive of all, he asserted.

Enumerating on the 4 success pillars for fintech, Choudhary said it is imperative to implement responsible innovations which serve the under-privileged, corporate governance; make technological advancements that are scalable and interoperable; giving importance to policy on data privacy, consumer protection, cyber security and prevention of financial crime.