Indian Central Bank Evaluating Its CBDC Options; RBI to Arrive At A Decision Soon

The Indian cryptocurrency market is preparing for new developments coming from the government as well as the its central bank - Reserve Bank of India (RBI). In the latest development, RBI’s deputy Governor B P Kanungo said that an internal committee has been set up that is having a close look at the possible CBDC options for the country.

Looking at the CBDC developments for other global economies, it looks like India is mulling to have an official digital currency. The dusty governor said that a latest announcement was done by the monetary policy committee on the digital currency.

“We had a committee that is still on the drawing board. In fact, an internal committee is taking a close look to decide on the model of the central bank digital currency and you will hear from the Reserve Bank very soon in the matter,” he added.

Last Friday, RBI Governor Shaktikanta Das appraised of the developments stating that “digital currency is work in progress in RBI”. Indian crypto investors are quite keen on what stand the government takes on the functioning of cryptocurrencies.

So far, Indian investors have a net exposure just above $1 billion to the overall crypto market. Although, relatively very small in size, the interest for digital currencies among retail investors is picking up very fast.

However, investors are still skeptical due to no regulatory clarity from the lawmakers. Recently, the Indian government was also mulling an option to ban private cryptocurrencies like Bitcoin. While there’s no concrete decision yet, this has led to fear among the investors about losing their investments.

The RBI said that it is quite apprehensive of the risks associated with using digital currencies for daily purpose. But in a report released last month, the Indian central bank noted that “Nevertheless, RBI is exploring the possibility as to whether there is a need for a digital version of fiat currency and in case there is, then how to operationalize it”.

Note that this is not the first time that RBI is considering an option for 2018. Back in 2018, RBI banned all nationalized banks from doing business with local crypto exchanges. At the same time, the RBI was also planning up for a Digital Rupee.