Union Budget: RBI to launch digital currency in 2022-23, FM unveils key reforms to boost digital ecosystem

1 Feb 2022 , 04:51 PM

Union Minister for Finance and Corporate Affairs, Nirmala Sitharaman proposed to introduce Digital Rupee, using blockchain and other technologies, to be issued by the Reserve Bank of India starting 2022-23.

While presenting the Union Budget for 2022-23, in Parliament today, she elaborated that introduction of Central Bank Digital Currency (CBDC) would give a big boost to the digital economy.

“Digital currency will also lead to a more efficient and cheaper currency management system”, she said.

Sitharaman said that in recent years, digital banking, digital payments and fintech innovations have grown at a rapid pace in the country. The government is continuously encouraging these sectors to ensure that the benefits of digital banking reach every nook and corner of the country in a consumer-friendly manner. Taking forward this agenda, and to mark 75 years of our independence, the Finance Minister announced that it is proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks.

In another important announcement, the Finance Minister said that in 2022, 100 per cent of 1.5 lakh post offices will come on the core banking system enabling financial inclusion and access to accounts through net banking, mobile banking, ATMs, and also providing online transfer of funds between post office accounts and bank accounts. This will be helpful, especially for farmers and senior citizens in rural areas, enabling interoperability and financial inclusion.

The Finance Minister assured that the financial support for the digital payment ecosystem announced in the previous Budget will continue in 2022-23. This will encourage further adoption of digital payments. There will also be a focus to promote the use of payment platforms that are economical and user friendly, she said.

She further proposed various other initiatives to boost investment and credit availability in the country.

Sitharaman proposed that the Data Centres and Energy Storage Systems including dense charging infrastructure and grid-scale battery systems would be included in the harmonized list of infrastructure. “This will facilitate credit availability for digital infrastructure and clean energy storage”, she said.

The Finance Minister proposed setting up an expert committee to examine and suggest appropriate measures to scale up Venture Capital and Private Equity investment. She noted that the Venture Capital and Private Equity invested more than Rs. 5.5 lakh crore last year facilitating one of the largest start-up and growth ecosystems. “Scaling up this investment requires a holistic examination of regulatory and other frictions”, she said.

Sitharaman said that the Government-backed Funds NIIF and SIDBI Fund of Funds had provided scale capital creating a multiplier effect. She said that for encouraging important sunrise sectors such as Climate Action, Deep-Tech, Digital Economy, Pharma and Agri-Tech, the government would promote thematic funds for blended finance with the government share being limited to 20 per cent and the funds being managed by private fund managers.  

The Finance Minister said that for financing the infrastructure needs, measures would be taken to enhance the financial viability of projects including PPP, with technical and knowledge assistance from multi-lateral agencies. She further said that enhancing financial viability shall also be obtained by adopting global best practices, innovative ways of financing, and balanced risk allocation. “Stepping-up of public investment will need to be complemented by private capital at a significant scale”, she stated.