Reserve Bank of India and CBDC Developments
The Reserve Bank of India (RBI) is in discussions with central banks from four to five countries, including those in Asia and advanced European economies, to establish cross-border central bank digital currency (CBDC) transaction frameworks for wholesale and retail use. This initiative aims to significantly decrease remittance costs and improve efficiency and speed in cross-border transactions, which is particularly beneficial for India due to its substantial remittance inflows.
Significance for India
- India is a major recipient of inward remittances, with key sources being:
- United States: 27.7%
- United Arab Emirates: 19.2%
- United Kingdom: 10.8%
- Saudi Arabia: 6.7%
- Singapore: 6.6%
- Indians abroad sent over $107 billion in FY26, with a record $132 billion remitted in the previous fiscal year.
CBDC Developments and Stance
- The RBI is piloting CBDC use cases in both retail and wholesale but is cautious about a full-scale launch, relying on other countries to roll out their CBDCs for effective cross-border functionality.
- Pilot initiatives began in November 2022 for wholesale and December 2022 for retail. Retail transactions have surpassed 120 million, with a total value exceeding ₹28,000 crore, involving over 8 million users.
Characteristics of CBDC
A CBDC is a digital form of legal tender issued by a central bank, akin to sovereign paper currency but in digital form. It is exchangeable with the existing currency and serves as a medium of payment, legal tender, and a stable store of value, appearing as a liability on the central bank's balance sheet.
RBI's Advocacy for CBDC over Crypto Assets
- The RBI emphasizes the need for CBDC over private digital currencies, citing it as the ultimate settlement asset to ensure trust in the monetary system.
- In its Financial Stability Report (FSR) of December 2025, the RBI maintained a cautious stance on crypto assets and prioritized sovereign digital infrastructure to safeguard monetary sovereignty and financial stability.
- The report outlined that CBDCs could offer the claimed benefits of stablecoins, such as efficiency and instant settlement, with the credibility of central bank money.
- RBI Governor Sanjay Malhotra, at the World Bank Group and IMF meeting in October 2025, advocated for CBDCs over stablecoins to optimize international payments, underlining their advantages.
