India’s central bank digital currency (CBDC), the digital rupee, has experienced a significant decline in usage, decreasing to a tenth of its peak in December 2023, according to sources involved in the pilot project. The Reserve Bank of India (RBI) initially reached 1 million daily retail transactions with the digital rupee by incentivizing banks and […]
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Modi Reappoints Nirmala Sitharaman as India’s Finance Minister — Investors Remain Concerned Over High Crypto Taxes
Indian Prime Minister Narendra Modi has reappointed Nirmala Sitharaman as Finance Minister. She remains instrumental in shaping India’s economic policies, including cryptocurrency regulation and taxation. Nirmala Sitharaman Reappointed as Finance Minister Indian Prime Minister Narendra Modi has reappointed Nirmala Sitharaman as Finance Minister, extending her tenure that began in 2019. Sitharaman, who delivered her sixth […]
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India’s Digital Rupee Expands: Non-Banks to Offer Central Bank Digital Currency Wallets
India’s central bank has announced that it will enable non-bank payment system operators to offer central bank digital currency (CBDC) wallets. Noting that “necessary changes will be made to the system to facilitate this,” the Reserve Bank of India (RBI) said the initiative is expected “to enhance access and expand choices available to users.” Non-Bank […]
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India’s De-Dollarization Push Flounders as Oil Suppliers Cite Rupee Repatriation Concerns
The Indian Oil Ministry recently acknowledged that the country’s push to pay for oil with rupees has failed because suppliers are not sure if they will be able to repatriate their funds. The decision is intended to help diminish India’s reliance on the U.S. dollar when settling its cross-border obligations.
High Transactional Costs of Converting Rupees
The Indian oil ministry recently informed a standing committee of parliament that the country’s attempt to have oil producers accept payment in the local currency has failed. The ministry cites the perceived high cost of converting the rupee to other major currencies as one of the reasons for the policy’s failure.
The oil suppliers, including the United Arab Emirates’ ADNOC, have also highlighted possible challenges that may arise when repatriating the generated revenues, the ministry added.
According to a report in the Economic Times, some oil producers believe the rupee’s weaknesses versus the U.S. dollar make it a less-than-ideal payment method.
“During FY 2022-23, no crude oil imports by oil PSUs were settled in [the] Indian rupee. Crude oil suppliers (including UAE’s ADNOC) continue to express their concern on the repatriation of funds in the preferred currency and also highlighted high transactional costs associated with conversion of funds along with exchange fluctuation risks,” the country’s oil ministry said.
The report also added that the Indian Oil Company (IOC) paid a premium over and above the prevailing price, illustrating the extent of India’s de-dollarization failure. Furthermore, the country’s oil ministry stated that the Indian conglomerate Reliance Industries Ltd and oil public sector undertakings (PSUs) still have no agreement to pay in rupees with any supplier.
Since July 11, 2022, the Reserve Bank of India (RBI) has permitted oil importers to pay with rupees and exporters to be paid in rupees. The decision is intended to help diminish India’s reliance on the U.S. dollar when settling its cross-border obligations. India’s regional rival China has already established agreements with some oil-producing countries that allow it to pay via its currency, the yuan.
Despite India’s failed goal of paying for oil with rupees, its de-dollarization policy has still achieved some success in certain non-oil trade transactions.
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India’s Central Bank RBI Launches CBDC Pilot in Call Money Market
India’s central bank, the Reserve Bank of India (RBI), has initiated a pilot for a second use case of its wholesale central bank digital currency (CBDC), focusing on the call money market. The Indian central bank reportedly plans to expand its e-rupee testing to cover the entire wholesale segment, including asset tokenization and repo transactions.
RBI Begins Testing Second Use Case of Its Wholesale CBDC
India’s central bank, the Reserve Bank of India (RBI), has begun testing its wholesale central bank digital currency (CBDC) in the call money market, Money Control reported Thursday, citing two unnamed people who claimed to be aware of the development. One of them was quoted as saying:
We have started the wholesale CBDC pilot in the call money market and some deals have also taken place.
The call money market is an essential part of the Indian money market, where banks and other financial institutions trade their surplus funds overnight or for a few days at market rates.
Nine of the banks involved in this digital rupee pilot are the same banks that participated in the RBI’s wholesale pilot for government securities initiated in November last year, the sources further mentioned. The nine banks are State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC First Bank, and HSBC. One of the sources told the news outlet:
All the banks are the same, just Federal Bank is added.
Moreover, Business Standard reported Thursday that additional use cases will be tested in the coming days, citing their own sources familiar with the Indian central bank’s wholesale CBDC pilot. “The roadmap is that the entire wholesale segment should be covered like asset tokenization where securities will be tokenized, repo transactions, etc.,” the publication quoted one of the sources as saying. “E-rupees will move from bond to call money to repo. Once the entire segment is covered, then a final pilot will be done for the entire wholesale segment.”
In addition to testing the digital rupee in the wholesale segment, the RBI initiated a CBDC pilot in the retail segment in December last year. Last month, RBI Governor Shaktikanta Das revealed that India’s central bank digital currency has been rolled out to approximately 1.46 million users. He added that the retail digital rupee pilot is being operated through 13 banks in 26 cities, and over 300,000 merchants accepted payments in CBDCs.
What do you think about the RBI piloting a second use case for its CBDC in the wholesale segment? Let us know in the comments section below.
India’s Central Bank Digital Currency Has 1.5M Users, 300K Merchants, Says RBI Chief
Reserve Bank of India (RBI) Governor Shaktikanta Das has revealed that India’s central bank digital currency (CBDC) now has around 1.5 million users. In addition, over 300,000 merchants are currently accepting payments in digital rupees, and the pilot is being operated through 13 banks in 26 cities.
RBI Governor’s Digital Rupee Update
Reserve Bank of India (RBI) Governor Shaktikanta Das provided an update on the progress of India’s central bank digital currency (CBDC) pilot on Wednesday at this year’s Global Fintech Fest in Mumbai. The Indian central bank began its digital rupee pilot for the wholesale segment in November last year, followed by a pilot in the retail segment in December.
The RBI governor revealed that India’s central bank digital currency trial has been rolled out to approximately 1.46 million users. He added that the digital rupee pilot is being operated through 13 banks in 26 cities, and over 300,000 merchants accepted payments in CBDCs as of Aug. 31.
Das further detailed that the RBI has enabled full interoperability of CBDC with UPI QR codes, noting that the central bank is targeting 1 million daily CBDC transactions by December this year, which will provide it with sufficient data points for analysis.
In February, RBI Deputy Governor T. Rabi Sankar said that 50,000 users and 5,000 merchants had adopted the central bank’s digital currency. By July, he shared that the user base had surged to 1.3 million, with 300,000 merchants accepting the digital rupee.
Moreover, RBI Executive Director Ajay Kumar Choudhary said Sunday on the sidelines of the G20 Leaders’ Summit that the Indian central bank is likely to launch a CBDC pilot for transactions for interbank borrowing or call money market by October. India holds the G20 Presidency this year. Choudhary was quoted by local media as saying:
The RBI will introduce the wholesale CBDC in the call market either this month or next month.
Choudhary believes that the e-rupee will rival cryptocurrency, stating in March that India’s central bank digital currency will act as an alternative to cryptocurrency. Last December, Sankar claimed that India’s CBDC should be able to do anything crypto can do without risks.
What do you think about the progress of India’s central bank digital currency? Let us know in the comments section below.
India’s Prime Minister Calls for Global Crypto Framework With Focus on Unified Approach, Adoption, Democratization
India’s Prime Minister Narendra Modi says crypto needs “a global framework and regulations.” He stressed: “The rapid pace of change of technology is a reality — there is no point in ignoring it or wishing it away. Instead, the focus should be on adoption, democratization, and a unified approach.”
Modi on Crypto Regulation
Indian Prime Minister Narendra Modi talked about cryptocurrency regulation in an interview with Business Today, published on Saturday. Modi, who recently returned to India from South Africa, where he attended the BRICS summit, said:
The rapid pace of change of technology is a reality — there is no point in ignoring it or wishing it away. Instead, the focus should be on adoption, democratization, and a unified approach.
“At the same time, the rules, regulations, and framework around it should not belong to one country or a group of countries. So not only crypto, but all emerging technologies need a global framework and regulations,” the Indian prime minister stressed.
“A global consensus-based model is needed, especially one which considers the concerns of the Global South. We can learn from the field of aviation. Be it air traffic control or air security, there are common global rules and regulations governing the sector,” he described.
India currently holds the G20 presidency. “In the past nine months, vast efforts and energy have been channeled into debt and crypto agendas,” Modi said, elaborating:
India’s G20 presidency expanded the crypto conversation beyond financial stability to consider its broader macroeconomic implications, especially for emerging markets and developing economies.
“The G20 reached a consensus on these matters, guiding standard-setting bodies accordingly. Our presidency also hosted enriching seminars and discussions, deepening insights into crypto assets,” the Indian leader concluded.
Earlier this month, India released its “Presidency Note as an input for a Roadmap on Establishing a Global Framework for Crypto Assets.” In July, the Financial Stability Board (FSB) published its proposed guidelines for a global regulatory framework for crypto assets. In April, the G20 finance ministers and central bank governors agreed that crypto regulation cannot be confined to one part of the world, noting that global policy responses are required.
Do you agree with Indian Prime Minister Narendra Modi about cryptocurrency regulations? Let us know in the comments section below.
BRICS Countries Can Use India’s UPI Instant Payment System, Prime Minister Modi Suggests
Member states of the BRICS bloc can follow the example of other nations and start using India’s Unified Payments Interface (UPI) system, according to Prime Minister Narendra Modi. The country is a leader in digital transactions, the head of the Indian government said in South Africa where the organization is holding its annual summit.
India to Become Developed Nation by 2047, Modi Says at BRICS Business Forum
India is the world’s fastest growing major economy, despite the current turmoil, and will soon become a 5 trillion-dollar economy, the Prime Minister of the most populous democracy, Narendra Modi, told participants in the BRICS Business Forum. The event is part of the sessions of the group’s summit held in Johannesburg on Aug. 22-24.
“There is absolutely no doubt that in the coming years, India will be the growth engine of the world and the reason for this is that India has converted crisis and difficulties into opportunities for economic improvements,” Modi also stated, quoted by NDTV. He added that “the people of India have resolve to become a developed nation by 2047.”
The Indian leader highlighted some of his country’s achievements in the past few years, including reforms that have improved the business climate such as reducing the compliance burden and removing red tape as well as large-scale investments in infrastructure. For example, 10,000 km of new highways are being constructed in India annually and the number of airports has doubled in less than a decade.
One of India’s success stories is the locally developed Unified Payments Interface, which has become one of the most successful payment systems in the world since its launch in 2016. Created by the National Payments Corporation of India, UPI facilitates instant transfers between bank accounts through mobile apps. In May of this year, it processed a record 9 billion transactions worth 0 billion and in the 2023 fiscal year, the value of annual transactions reached .7 trillion.
“Today in India UPI is used at all levels from street vendors to large shopping malls. Today among all countries in the world, India is the country with the highest digital transaction,” Narendra Modi pointed out. “Countries like UAE, Singapore, and France are joining this platform. There are many possibilities of working on this with BRICS countries as well,” he emphasized. India has shared its UPI technology with a number of other nations, including Australia, Saudi Arabia, and Pakistan.
At the summit, the leaders of the BRICS member states and other officials have been discussing a range of topics relevant to the development of their nations – Brazil, Russia, India, China, and South Africa – as well as the future role of the organization on the global stage. These include promoting the use of local currencies in cross-border trade, the introduction of unified settlement systems, the potential launch of a common currency, and the bloc’s expansion.
Do you think the other BRICS members will show interest in adopting India’s UPI Instant Payment System? Tell us in the comments section below.
India’s External Affairs Minister Shuns BRICS Currency Talks, Prioritizes Rupee’s Strength Instead
Members of the BRICS alliance are meeting at a summit in Johannesburg, South Africa, in August, focusing attention on the potential for the BRICS bloc to create a gold-backed reserve currency. However, Subrahmanyam Jaishankar, India’s external affairs minister, said India isn’t interested in issuing a common BRICS currency. Instead, he said India is more concerned with strengthening the rupee.
India Snubs Common Currency Idea, Reduces Russian Oil Imports While Increasing U.S. Crude Purchases
In recent times, a great deal of interest is aimed at the BRICS nations — Brazil, Russia, India, China, and South Africa. In August, BRICS ministers plan to discuss adding new members to the alliance and creating a gold-backed common currency. Last week, Rasoul Mousavi, a representative from Iran’s Ministry of Foreign Affairs, told the press that a BRICS currency could benefit Iran and diminish the influence of the U.S. dollar.
Brazil, Russia, China, and South Africa are supporting the creation of a common BRICS currency, but India is not interested, according to Subrahmanyam Jaishankar, India’s external affairs minister. Jaishankar, in a press conference on July 3, 2023, said India is solely focused on bolstering the rupee, the country’s native currency. “On what we will discuss at the BRICS meeting, we’ll have to see because there are many other issues – but there is no idea of a BRICS currency,” Jaishankar stated.
India’s external affairs minister added:
Currencies will remain a national issue for a long time to come.
India’s GDP has proven resilient amid global economic uncertainty, outpacing other members of the BRICS bloc. Moreover, a recent report from Goldman Sachs Research predicts India could become the world’s second-largest economy by 2075. The Times of India reported that India, which has strong ties with the U.S. and Europe, does not want to jeopardize its trade relationships with Western nations by endorsing a “yet-to-be-released BRICS currency.”
Moreover, India has started buying more oil from the United States and reducing its purchases of Russian crude, according to data from energy intelligence company Vortexa. In May, Russian crude made up half of India’s imports. However, in June, daily oil imports from Russia to India fell from 1.96 million barrels to 1.798 million barrels. The Times of India suggests India may be hesitant to invite new members to the BRICS alliance. The newspaper’s contributor, Dr. Prashant Prabhakar Deshpande, says India will want to establish “well-established criteria for qualification.”
In a noteworthy development, preceding Jaishankar’s remarks on July 3, president Joe Biden of the United States and prime minister Narendra Modi of India emphasized the exceptional partnership between their nations, referring to them as two of the “closest partners in the world.”
Is India’s decision to prioritize the rupee over a BRICS common currency a strategic move or a missed opportunity for economic integration? Share your thoughts and opinions about this subject in the comments section below.
India’s Central Bank Digital Currency Will Act as Alternative to Cryptocurrency, Says RBI Official
An official of India’s central bank, the Reserve Bank of India (RBI), says that the country’s central bank digital currency (CBDC) will act as an alternative to cryptocurrency. He stressed that the digital rupee must possess all the attributes of physical currency, including anonymity.
India’s CBDC Update
Reserve Bank of India (RBI) Executive Director Ajay Kumar Choudhary provided some updates on India’s central bank digital currency (CBDC) during an interview with CNBC-TV18 on Friday.
The Indian central bank is exploring the offline functionality of the digital rupee, Choudhary conveyed. Noting that the CBDC will soon become a medium of exchange in India, he emphasized that it needs to have all features of physical currency, including anonymity. The RBI executive director previously said the design of India’s CBDC will be the least disruptive and will not replace physical currency or the current financial system.
Choudhary further told the news outlet that the digital rupee will provide the public with a digital form of money and will act as an alternative to cryptocurrencies. His statement echoed RBI Deputy Governor T. Rabi Sankar’s recent claim that the digital rupee should be able to do anything cryptocurrency can do but without the associated risks of crypto.
India’s central bank began piloting its digital rupee in the wholesale sector in November and in the retail sector in December last year. Reliance Retail became the first retailer to accept digital rupees. Last month, Sankar revealed that the digital rupee now has over 50,000 users and is accepted by 5,000 merchants.
RBI Governor Shaktikanta Das said in December last year that the CBDC is the currency of the future. He clarified that India’s existing instant real-time payment system, the Unified Payments Interface (UPI), relies on banks as intermediaries, whereas a CBDC functions more like physical currency notes with an automated sweep in and out feature.
Meanwhile, the RBI continues to recommend a complete ban on cryptocurrencies, including bitcoin and ether. Das has warned that crypto poses major risks to India’s financial stability, monetary system, and cyber security. Moreover, he cautioned that it could undermine the central bank’s authority.
What do you think about the RBI executive director’s statements about the digital rupee? Let us know in the comments section below.