Financial exclusion is something that affects the entire nation in a significant way. We don’t talk about it enough as many of us are privileged to have wider access to every financial service available. But that is not the case for more than 15% of our country’s population.
According to the World Bank, there are 1.6 billion people who don’t have access to cheques, let alone the luxury of credit cards. In India, we have nearly 190 million unbanked adults. And that needs to change. If we can find a way to provide broader access, it is estimated to boost our GDP by 14%. And the best way to enhance the degree of financial inclusion is to deploy a Central Bank Digital Currency (CBDC).
We have seen many countries take great interest in exploring possibilities of CBDCs working in parallel with traditional payment facilities. China, the leading member in the rate of e-money, has outpaced its global peers in research, development, and pilot implementation. Though we don’t have an official timetable set, we still see gradual development with digital yuan.
India is still in the research phase and plans towards a ‘phased introduction’ of the digital rupee in this race for the future of money. Though we are still a cash dominant nation, several benefits come with a CBDC. From a survey conducted by RBI on retail payment habits, we can see that digital payments are continuously increasing for small-value transactions.
The implementation of CBDCs in India should be effective not only in the adoption of e-money but also in its usage. Many people believe that digital currencies can change the behavior of the public towards digital payments and shift the focus from conventional banking systems. To gain trust and spread awareness about CBDCs, we need to see the government create an ecosystem where a digital currency and monetary policy are not contradictory.
Data is going to be huge
CBDC implementation in the wholesale and retail segments is going to need tremendous amounts of effort put into data analysis. We need to find ways to make users use e-money wallets so that we can understand how they are using digital rupees and what type of purchases are being made in different time periods. The government should also pursue a series of trials in major cities across the country and see how the people are reacting.
Awareness is key
Even some of the well-established countries are finding it challenging to educate the masses on CBDCs, so if people are not ready to accept e-money as a form of payment, it is going to hinder the growth of adoption. From small merchants to large stores, everyone needs to have knowledge about such digital payments and provide an option along with other types of payments like a debit card or UPI. Shopkeepers and restaurant owners also need to understand how they can process digital currency payments. A demo drive for heavily populated streets can be a useful tactic.
Utilization of Tourist Places
Foreigners who don’t have local bank accounts face difficulties in making payments, so they should be able to have access to government-backed digital currency for everyday use. This not only helps in acquiring more test data but also elevates a high degree of internationalization.
Will G-Pay or Phone-pe be replaced?
This is highly unlikely to happen anytime soon. What is most needed is an application with a similar interface and more integrations like shopping, grocery, and flights. By providing a smoother user experience with more functionalities, it will attract a lot of users and merchants.
For merchants, it is going to be highly beneficial. There will be no registration fee or commission so that they can be the first target groups. With millions of users invested in such apps, it will be a challenge to convince an alternative payment. But there is no saying that they cannot co-exist. That should be our goal.
At the Moment, RBI’s approach on CBDC focuses mainly on the retail segment. They are considering some significant issues and use-cases to plan out the roadmap. The underlying technology is yet to be decided, and we still have no confirmation on the validation mechanism- token or account-based.
With so many unanswered questions, we have to pay close attention to RBI’s pilot implementation and different stages of CBDC development. For India to take back its leadership position in payment systems, we need to see more action and drive towards solving the main technical challenges associated with CBDC.

Born and brought up in India, Karthikeya Gutta is a crypto journalist and freelance contributor for ItsBlockchain. He covers various aspects of the industry with in-depth analysis and research. His passion towards blockchain and crypto ecosystem is mainly because he believes it can really change the world and help millions of people.
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