Revolutionary Changes in Digital Currency in India: Offline Transactions, Greater Programmability, and Security!

Pilot project for retail CBDC in India: additional programmability features and offline transactions

The Reserve Bank of India (RBI) is introducing new programmability features and offline transactions as part of a pilot project for the retail Central Bank Digital Currency (CBDC). The project was launched in December 2022 and has already achieved its goal of 10 lakh transactions per day in December 2023.

One of the new features proposed by RBI is the ability to conduct offline transactions in CBDC-R [Retail], which will allow for payments to be made in areas with weak or limited internet access. Various offline solutions will be tested as part of the pilot, including proximity-based and non-proximity-based solutions, in hilly, rural, and urban areas.

In terms of programmability, the CBDC-R system enables peer-to-peer (P2P) and person-to-merchant (P2M) transactions using digital rupee wallets provided by banks through the pilot project. The programmability feature will allow different users, such as government agencies, to ensure the fulfillment of specific services, while companies will be able to program specific expenses, such as business travel for their employees.

Meanwhile, RBI authorities are working on enhancing the security features of Aadhar-enabled payment systems (AePS), which were used by as many as 37 crore people in 2023. To achieve this, the proposed improvement includes a mandatory due diligence examination of AePS touchpoint operators conducted by banks.

To further secure AePS transactions, the adoption of a “Framework for authentication of digital payment transactions” based on principles has been proposed. This is another step towards ensuring greater security for digital transactions, which is significant for the entire community using these payment mechanisms.

The Reserve Bank of India is entering a new era of digital payments by introducing additional programmability features and offline transactions as part of the pilot project for the retail CBDC. This is an important step towards modernizing the payment system in the country and building a more accessible and secure future for digital currency.