Digitalization is touching the new heights all over the globe. India is not far behind in this race of digitalization. There has been a phenomenal digital transformation in India as well which is fueled by 4G, internet and mobility.

Our honorable finance minister has recently announced the launch of CBDC – Central Bank Digital Currency— also known as the Digital Rupee. CBDC is the digital form of the fiat currency issued by the central bank of India. CBDC will give rise to 3rd wave of transformation.

To throw some light on the CBDC we had industry experts Mr. Ashutosh Sharma – Forester Research; Mr. Nikhil Alulkar – Leader of Tech Mahindra India Business, and Mr. S Rajesh – Leader of Payments Practice of Tech Mahindra globally in an interactive LinkedIn live session by Mr. Malhar Barai - Head – Marketing (APJ & I) | Digital Marketing, Tech Mahindra.

Curious to seek answers to questions on CBDC and the digital rupee? Check out this session’s recording:

Key Takeaways:

  • India is in the middle position with respect to its preparation for the implementation of the currency.
  • CBDC by RBI will be a big boost to the Indian economy. It will lead to more efficient and cheaper currency management system.
  • According to S. Rajesh, there are 2 ways the CBDC will be issued: 1) Deposit account with central bank known as account-based model. 2) Token-based model.
  • As Ashutosh Sharma mentioned the adoption of CBDC initially will be more dependent on the people from tier 1 and tier 2 cities that are more familiar with the digital currency than the rural mass. Furthermore, the reason for the adoption of CBDC will vary from country to country.
  • There will be a lot of industries that will be playing a vital role in the distribution and implementation, but their role will depend on the architecture that will be followed for the same. Moreover, there wouldn’t be any interest rates on CBDC for the economies that are stable from that perspective.
  • According to Nikhil Alulkar, CBDC will have a huge play for technology.  This whole initiative is backed, enabled & implemented by technology.

There are various places where tech firms will play a vital role: 1) making the currency available: firms will enable the backend infrastructure i.e., high speed internet and telecommunication; 2) modernization and transmission on core banking and payment systems of banks; 3) building a resilient infrastructure to maintain transparency and prevent cyber-attacks; 4) tech companies will play a vital role in making all this online 24*7.