India’s central bank, the Reserve Bank of India (RBI), has confirmed the use of Ripple’s XRP ledger for its digital rupee project. The collaboration aims to enhance the efficiency and security of the digital rupee by leveraging Ripple’s expertise in blockchain technology and cross-border transactions.

Introduced by the Finance Minister of India in February 2020, the Digital Rupee (e₹) is a tokenized digital version of the Indian Rupee, issued by the Reserve Bank of India (RBI) as a Central Bank Digital Currency (CBDC). The digital rupee is divided into two segments: wholesale (e₹-W) for financial institutions and retail (eR) for consumer and business transactions.

Ripple’s XRP ledger is being adopted by the RBI for the digital rupee project to leverage its robust blockchain technology and secure transaction capabilities. Ripple’s XRP ledger provides a decentralized and transparent platform for digital rupees, ensuring secure and efficient transactions.

The use of the XRP ledger in digital rupees facilitates faster and more cost-effective cross-border transactions, which is a significant advantage for the Indian economy.

In addition, with the XRP ledger the RBI wants to take advantage of its scalability and speed as it can handle a large volume of transactions per second (up to 1,500), ensuring that the digital rupee is transferred without delay. Can support large-scale financial activities.

Additionally, the XRP ledger’s strong security features prevent fraud and ensure transaction integrity.

The XRP ledger’s interoperability with other financial systems allows for seamless integration with existing banking and financial infrastructure.

The integration of the XRP ledger is expected to streamline digital transactions, reducing the time and cost associated with traditional banking methods.

The digital currency, powered by the XRP ledger, can reach remote and underserved areas, promoting greater financial inclusion.

Faster and more secure transactions can boost economic activity, helping India’s overall economic growth.

The transparent and traceable nature of blockchain technology helps comply with regulatory requirements, making the system more reliable.

This strategic move by RBI not only modernizes India’s financial infrastructure but also puts the country at the forefront of the global digital currency landscape.

In September this year, the RBI revealed that by June 2024, 5 million digital rupee users and 420,000 merchants had participated in the retail central bank digital currency (CBDC) pilot, which began in late October 2022.

It should be noted that several Indian banks have already partnered with Ripple to leverage its blockchain technology for cross-border remittances and payments. In September 2020, India’s largest private bank, HDFC has onboarded Ripple’s global payment network ‘RippleNet’. IndusInd Bank has partnered with Ripple to revolutionize cross-border payments using Ripple Net. The aim of this partnership is to provide quick settlements and secure transactions.

Kerala-headquartered Federal Bank has also collaborated with Ripple to expand its remittance network, making cross-border transactions safer and more efficient. Kotak Mahindra Bank is another major Indian bank that has joined RippleNet to facilitate seamless cross-border payments.

These partnerships highlight the growing adoption of blockchain technology in the Indian banking sector to improve transaction speed, security and cost efficiency.