The Reserve Bank of India warned that the risks from stablecoins outweigh the benefits, urging a preference for the digital rupee, which has over 5 million users.
The Reserve Bank of India (RBI) has taken a clear stance on stablecoins in its latest Financial Stability Report, affirming its “strong support” for countries to prioritize central bank-issued digital currencies (CBDCs) over privately issued stablecoins. This position reflects the Indian government’s deep skepticism toward privately held crypto assets.
In a report released on Wednesday, the RBI strongly warned that the risks stablecoins pose to macroeconomic financial stability far outweigh their perceived benefits. The central bank stated that while stablecoins are gaining wider global acceptance, it is more concerned about the risks to financial stability arising from their increasing use.
The RBI emphasizes that CBDCs are a better solution for maintaining confidence in the currency and preserving financial stability. India has been developing a digital rupee for over two years, starting a pilot program in December 2022. According to recent reports, the pilot program now has over 5 million users and 400,000 merchants participating.
Policies restricting private cryptocurrency assets.
India does not completely ban cryptocurrencies but applies strict tax policies with a 30% tax on profits and 1% on all transactions, making their use difficult. Finance Minister Nirmala Sitharaman has repeatedly stated that India will not recognize private cryptocurrencies as legal tender.
The report also presented a positive outlook for the banking system, with the aggregate non-performing loan ratio projected to fall to 1.9% by the end of March 2027, compared to 2.1% recorded at the end of September 2024. Governor Sanjay Malhotra affirmed that both the Indian economy and the financial system remain robust and resilient, despite acknowledging the short-term challenges from external spillover effects.
However, the RBI warned of mounting pressure in the non-bank financial sector (NBFC). Stress tests on 174 NBFCs showed that the combined non-performing loan (NPL) ratio could rise to 2.9% by September 2026, up from 2.3% in September 2024. The RBI noted that while the NPL ratio has decreased, the volume of newly arising NPLs is trending upwards.
In stress test scenarios, if the economy maintains GDP growth of 7.3% in the current fiscal year, the banking sector will continue to strengthen. However, in the event of a severe economic downturn, the non-performing loan ratio could be pushed up to 4.2%.
