India’s private sector lender, IndusInd Bank, has collaborated with climate-tech company Circularity Innovation Hub (CIH) to successfully execute the Reserve Bank of India’s (RBI’s) programmable central bank digital currency (CBDC) pilot.
The pilot project will be executed as an alternate form of CBDC where the bank can program the end use of funds that would be disbursed to farmers instead of the generation of carbon credits, IndusInd said in a statement.
In February, India’s central bank said it is looking to enable additional functionalities of programmability and offline capability in CBDC retail payments. While programmability is expected to facilitate transactions for specific and targeted purposes, offline functionality will allow transactions in areas with poor or limited internet connectivity.
A CBDC is a digital form of currency notes issued by the country’s central bank. As many as 130 countries, representing 98% of the global gross domestic product (GDP), are exploring a CBDC.
“Collaborating with CIH and other stakeholders, we are excited to drive a positive change in the agriculture sector and beyond. This collaboration reflects our commitment to advancing both economic growth and environmental sustainability,” Sumant Kathpalia, managing director and chief executive of IndusInd Bank, said.
The bank started the programmable CBDC disbursement to 50 farmers in Ratnagiri district of Maharashtra and will cover around 1000 farmers in the future. This is significant as it points to the adoption of innovative financial solutions for the Indian agriculture sector—the backbone of the Indian economy, contributing over 16% to the country’s gross domestic product (GDP).
IndusInd Bank’s project involves the lender crafting digital wallets and managing CBDC transfers, along with partners, including CIH, which is a sponsoring agency for this project. CIH builds circular economy business models around all-things-waste not only to recycle it, but also repurpose it as energy or bi-product, thus generating circularity credits.
Hindustan Agro and Jackfruit King Company spearheaded farmer engagement, linking sustainable practices to additional revenue streams, while Emertech Innovations developed a blockchain-backed platform to provide end-to-end traceability and transparency in the generation of revenues from circularity credits and its traceable disbursement. The collaboration aims to promote circularity credits from recycling agricultural waste.
“This initiative with the RBI showcases the transformative potential of combining technology with sustainability. We’re excited about the future, particularly our plans to extend these benefits to waste reclaimers and more farmers,” remarked Gaurav Somwanshi, co-founder and chief executive of Emertech Innovations.
IndusInd Bank, CIH, and partners aim to scale the pilot into a nationwide initiative benefiting farmers. The second phase of the project will focus on Safai Karmacharis (cleaning staff), with the aim of increasing their income by leveraging revenues generated from the collection, recycling, and repurposing of plastic waste.
IndusInd Bank, with a customer base of about 39 million, posted a net profit of Indian Rupees 8,977 crores ($1.07 million) for the year ended March 31, 2024—a growth of 21% over the previous year—aided by healthy loan growth.
More Stories
Hard to Believe Statement from Fund Manager: “Solana Price Could Rise to $400, Here’s Why”
Bitcoin traders expect Fed Chair Powell to ‘pump our bags’ and BTC to target $80K+
DEX volume rises: What does it indicate for BNB’s price?