A conversation between Reserve Bank of India Deputy Governor T Rabi Sankar and Rachita Prasad on the future of digital payments, central bank digital currencies, and financial system resilience.
India has emerged as one of the world’s most dynamic digital payments markets, driven by the rapid adoption of the Unified Payments Interface (UPI) and an expanding fintech ecosystem. With UPI processing hundreds of millions of transactions each day, the country has become a global reference point for real-time payments infrastructure. The central bank, Reserve Bank of India (RBI), says it can expand more.
RBI is advancing pilots for a central bank digital currency (CBDC) and looking beyond domestic success to the next phase of innovation with programmable digital currency and cross-border payment integration.
In a wide-ranging, in-depth conversation with Rachita Prasad exclusively for Central Bank Payments News, RBI’s Deputy Governor T Rabi Sankar shares his perspective on CBDC pilots, the future of UPI, the risks posed by crypto-assets, India’s currency strategy, and how regulators are working with fintech companies to balance innovation with financial stability.
Sankar is a key member of the RBI’s senior leadership and oversees several critical functions like Currency Management, Payment, and Settlement Systems, FinTech, and the Financial Markets Regulation, among others. He also served as a member of the Government of India’s Sixteenth Finance Commission.
CBDC and Cross-Border Payments
CBPN: Where does India stand in its CBDC journey today?
T Rabi Sankar: We started experimenting with CBDCs towards the end of 2022 although we have been watching this space for much longer before that. We started our pilots in 2022 for both wholesale and retail. Our objective in the beginning was never to introduce it in a hasty manner because we already knew that we have a fast payment system, which is instantaneous and very effective. There was no tearing hurry to start off a new payment system. So, we wanted to focus on getting three things right. One, the right technology, two, right use cases, and three, the right time. We were waiting for an opportune time when other countries would also be taking up CBDCs because its best use case, in our view, is in the cross-border space.
NPCI (National Payments Corporation of India) provides the technology for CBDC and I think that by and large, we have got the technology right. We wanted to get the distribution methodology right as well so unlike our initial idea of doing it only through banks, we found we could use non-banks too, especially to close the last mile gap. We are almost ready on that.
CBDC is a digital token, whereas UPI is a payment instrument. As a form of money, CBDC can be tokenised and programmed, enabling use cases that conventional payment systems cannot support. With CBDC, we can ensure it reaches an intended target for an intended purpose. The government is looking at using programmable CBDC for its public distribution system. We believe programmability is what will eventually give CBDC the edge vis-à-vis other payment instruments.
CBPN: What interactions is RBI having with other central banks for cross-border payments in CBDC?
T Rabi Sankar: We are talking to some other central banks and they are at various stages of progress. Let me not take names though. We have seen interest in CBDCs that was not there two years back, by central banks and by different jurisdictions. BIS Singapore has developed an mBridge model, of which we, in a way, are also, a part. That’s one way of linking cross-border CBDCs, but there can be many other models. At this point in time, countries have to first develop their own CBDC before this conversation can actually include real world cross border use cases. India is a large recipient of remittances and is keen to link retail CBDCs with countries in key remittance corridors.
CBPN: India has assumed the BRICS presidency for 2026. Will there be a concerted effort to link BRICS countries?
T Rabi Sankar: We are looking at global linkages from a bilateral and regional point of view. I am …
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