Reserve Bank of India scales cross-border payments platform

India formed agreements with regions like Sri Lanka, Bhutan, and Nepal, and intends to add the United Arab Emirates (UAE) to the settlements program, as detailed by Bloomberg. The country is also exploring leveraging central bank digital currencies (CBDCs) as its primary settlement procedure. Currently, the CBDC is a bank-to-bank service, not a heavily adopted consumer-facing central bank digital currency. In addition, RBI aims to scale the CBDC to include retail consumers. However, the financial institution did not deliver a timeframe for implementing this move.

India’s focus on advancing CBDCs 

Being amongst the largest proponents of CBDCs worldwide, India started investigating the prospect of CBDC settlement in 2020, while in 2022, the financial institution began testing CBDC development via pilot programs. Moreover, in February 2024, RBI began working on offline solutions for the digital rupee to support its use in the many rural parts of India without scaled online connectivity. These efforts were intended to address difficulties related to internet access, with the primary objective of CBDCs being to improve monetary oversight and minimise cash usage. Also, both developing and advanced economies share a common motivation for introducing CBDC initiatives, including ensuring financial stability and scaling cross-border efficiency. At the same time, developing regions look into leveraging CBDCs to expand financial inclusion.

Furthermore, in August 2024, RBI proposed a plug-and-play system to increase interoperability in cross-border payments. The bank discussed the potential for making cross-border transactions more efficient due to the emergence of fast systems and CBDCs. To address this, the RBI proposed the development of a plug-and-play system that could assist replicability while complying with the sovereignty of individual nations. The framework was intended to allow countries to implement cross-border payment solutions that meet their specific needs, demands, and preferences while ensuring compatibility with other regions’ systems.