The Reserve Bank of India (RBI) has consulted with public sector banks and fintechs such as FIS in order to test out a central bank digital currency.
The project aims to slow the growth of private cryptocurrencies in India or eliminate them from the market altogether according to RBI officials cited by atmmarketplace.com. Consultations for the CBDC trial are underway with fintechs such as FIS and banks such as State Bank of India, Punjab National Bank, Union Bank of India and Bank of Baroda.
According to the same source, US-based financial services company FIS launched a CBDC Virtual Lab in August 2022. Before this launch, the company was already activating in the sector by hosting conferences and roundtables on the subject.
According to cointelegraph.com, the RBI is looking to implement CBDCs gradually, in three steps in 2022 and 2023. Moreover, during a speech discussing the budget for 2022, Indian finance minister Nirmala Sitharaman spoke favourably about CBDCs in the context of India’s economic growth.
Following her speech, Union Commerce and Industry Minister Piyush Goyal revealed that RBI’s CBDCs will become India’s official and legal tender. He also added that the Indian government does not recognise private cryptocurrencies as legal tender. However, if citizens will still decide to hold these assets, they will be subjected to a 30% crypto tax.
In July 2022, the RBI discussed the future of virtual digital assets, indicating a strong regulation or total ban of cryptocurrencies. RBI has expressed concerns about the destabilising effect of cryptos on the monetary and fiscal stability of India, recommending the framing of legislation in the field.
The Financial Stability Board (FSB), a body comprising of regulators, treasury officials, and central bankers from the G20 economies, including India, is considering a proposal of robust global rules for crypto, which would be discussed in a meeting scheduled for October 2022.
In August 2022, the RIB unveiled its regulatory framework for digital lending, following recommendations put forward by the digital lending working group in November 2021. The framework aims to mitigate regulatory concerns and is based on the principle that the business of lending can only be carried out by entities either regulated by the RBI or permitted to do so by law.
As per Annex I, the framework largely applies to regulated entities and lending service providers engaged by the same. As per Annexes II and III, other authorised entities may be regulated through rules based on the working group's recommendations.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now