RBI Governor Highlights Need for Faster Remittance Settlements Amid Advancing eRupee Trials

The Reserve Bank of India (RBI), that is spearheading the creation and testing of the eRupee CBDC, is aiming to fasten the time it takes for financial settlements to be completed. In a recent keynote address at the RBI@91 high-level conference in New Delhi on October 14, RBI Governor Shaktikanta Das highlighted that India is among the few major economies with a 24x7 real-time gross settlement (RTGS) system, poised to evolve with advancing technologies.

Taking about the eRupee CBDC, Das said it makes for an integral part of the ‘world class digital public infrastructure (DPI) that has led to the creation of several digital financial products. The development of these protocols including the eRupee is integral to facilitate cross-border transactions cost-effectively in real time, he said. In addition to India, countries including China, Hong Kong, Iran, and Brazil are also presently working on their respective CBDCs.

In light of the ongoing global efforts surrounding CBDCs, the RBI has emphasised the need for international collaboration to establish a uniform functional rulebook. This initiative aims to enhance the effective use of CBDCs for quicker cross-border settlements.

“Going forward, harmonisation of standards and interoperability would be important for CBDCs for cross border payments and to overcome the serious financial stability concerns associated with cryptocurrencies,” Das said.

The RBI Governor voiced concerns that countries choosing to design their own CBDC systems based on local market conditions could hinder efforts to harmonize global CBDC standards. To address this challenge, Das proposed developing a plug-and-play system that would enable countries to replicate India's experience while preserving their sovereignty. However, he did not elaborate further on this suggestion at this time.

Excerpts from Das' speech have surfaced on social media.

Edul Patel, the founder and CEO of crypto investment platform Mudrex has appreaciated the RBI's push to reduce remittance costs and bring real-time settlement for currencies like the dollar and euro.

“With so many families depending on remittances, cutting down the time and fees for cross-border payments means more money reaching those who need it, faster. Expanding India's eRupee initiative and connecting the CBDC with UPI could make global transactions smoother and safer,” Patel told Gadgets360.

Patel noted that this initiative could position India as a leader in enhancing the accessibility of cross-border payments and strengthening international trade relations.

India's eRupee has been in trial since December 2022 across peer-to-peer, wholesale, and retail ecosystems. At present, the eRupee is being tested for offline features and programmability functions – that will make it an essential factor in growing financial inclusion in India.

While the RBI adopts a technology-focused approach to oversee advancements in the fintech industry, it has strongly urged banks to stay vigilant about exposing their operations to emerging technologies.

“Latest technological advancements such as Artificial Intelligence (AI) and Machine Learning (ML) have opened new avenues of business and profit expansion for financial institutions. At the same time, these technologies also pose financial stability risks,” Das noted. He warned that if financial institutions heavily rely on AI, ML, and cryptocurrencies, they may amplify systemic risks, as failures or disruptions in these systems could have cascading effects.