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## TL; DR

The central bank of India is working towards integrating an AI-driven conversational payment facility with UPI.

India is conducting a pilot program of its central bank digital currency (CBDC).

There is no legal ban of cryptocurrencies in India although there is no regulation to govern them. 

## Introduction 
The role of artificial intelligence in business has been increasing since 2021. In the recent past AI was introduced in the crypto sector where several blockchain use it to enhance their security and provide unique products.

As a result, there is a new category of crypto assets called AI cryptocurrencies, provided by blockchains that use artificial intelligence. This article discusses how the Indian Central Bank aims to integrate AI in the unified payments interface (UPI). 

## Reserve Bank of India to Use AI for UPI Payments 

The Reserve Bank of India has announced its intention to use artificial intelligence for the unified payments interface (UPI). Shaktikanta Das, the RBI governor said that the bank will soon launch "Conversational Payments” on UPI. That AI-powered system will lead to secure and convenient transactions.

The RBI aims to bring new features to the UPI after realizing that it has transformed the digital payment system as it is safe, secure and easy to use. Through introducing new features like conversational payments, the RBI wants to cater for the different needs of the Indian economy. 

The RBI’s focus is to create an AI-driven system which will initiate and complete transactions through a conversation. Nevertheless, the AI conversational payment system will only be available on smartphones and “feature phone-based UPI channels”. 

The RBI, through a report entitled “Statement on Development and Regulatory Policies, said, “As Artificial Intelligence (AI) is becoming increasingly integrated into the digital economy, conversational instructions hold immense potential in enhancing ease of use, and consequently reach, of the UPI system.” 

Take a look art [Top artificial-intelligence Crypto Coins & Tokens by Market Cap](https://www.gate.io/price/view/artificial-intelligence "Top artificial-intelligence Crypto Coins & Tokens by Market Cap")

## What are Conversational Payment Systems? 

Conversational payments is a system where financial transactions are processed using a message conversation or chat. Two parties, where one is the payment provider and the other is the chat operator, are involved in every transaction. In addition it involves the use of Chatbots, Intelligent Virtual Assistants (IVAs) and Voicebots.

In this case, the chatbots will provide the users with direct payment links or QR codes, enabling the transacting parties to execute payments seamlessly during their conversations. The fact that a transaction occurs within a consolidated environment increases the security and safety of the payment system. 

According to the central bank, during the first phase the conversational UPI payment facility will be available in English and Hindi. However, with the passage of time  other languages will be added. 

Read also: [What are AI Tokens?](https://www.gate.io/learn/articles/what-are-ai-tokens/501 "What are AI Tokens?")

## The UPI and Near Field Communication (NFC) Technology

The AI-powered transactional payment system relies on two main technologies, Near Field Communication (NFC) and UPI. The unified payments interface (UPI) is a peer-to-merchant as well as peer-to-peer transaction facility usable on mobile phones.

On the other hand, the Near Field Communication (NFC), a technology that enables two devices such as smartphones to communicate with each other, enables individuals to carry out contactless transactions when they are within a certain distance from each other. 

According to the RBI, “This feature will not only enable retail digital payments in situations where internet/telecom connectivity is weak or not available, it will also ensure speed, with minimal transaction declines. Instructions to NPCI will be issued shortly.”

One advantage of the AI-powered conversational payment system is that it enables real-time payments where the internet/telecom connectivity is weak or unavailable. Additionally, the system declines very few transactions.

Again, the use of the conversational payment system can further enhance the adoption of UPI while making QR code made payments accessible to many people in the country. Further to this, those who used to face difficulties in navigating mobile applications when making digital payments will find the new system very user-friendly. This is because artificial intelligence will direct them. 

Read also about the [India's Crypto Tax](https://www.gate.io/blog_detail/553/india-s-crypto-tax "India's Crypto Tax")

## Central Bank Digital Currency

The RBI has also announced that it is in the process of developing its central bank digital currency, the eRupee. Already, the e-rupee is in the testing phase where over 100,000 customers and 170,000 merchants are participating in the pilot program. 

The digital Rupee will be a legal tender in the country and will be exchangeable at par with its physical counterparty. In fact, the digital Rupee, a digital currency in India, is a version of cryptocurrency created by the Indian government and will be officially legalized, meaning that it will enable crypto payments in the country. 

## Crypto Regulation in India

Now that we have [mentioned digital Rupee](https://www.gate.io/how-to-buy/rupee-rup "mentioned digital Rupee") as a version of cryptocurrency, let’s discuss the current crypto regulation in the country. 

Currently, cryptocurrencies are not regulated in India. This means that there are no rules that govern the use of cryptocurrencies in the country. So, if there are disputes pertaining trading cryptocurrencies or conducting crypto payments there is no legal dispute resolution on that. Therefore, trading of digital assets like NFTs and cryptocurrencies is done at investor’s risk.

Read also: [How are cryptocurrencies currently regulated in countries around the world?](https://www.gate.io/blog_detail/378/how-are-cryptocurrencies-currently-regulated-in-countries-around-the-world "How are cryptocurrencies currently regulated in countries around the world?")

Although there is no official legal ban on dealing with cryptocurrencies, the government position based on its spokespersons like the Reserve Bank Of India Governor and the Finance Minister shows that cryptocurrencies are illegal in the country. However, since 2021 the government has been working on a cryptocurrency bill entitled “Cryptocurrency and Regulation of Official Digital Currency Bill, 2021.” 

## Conclusion 

India’s central bank is currently working on introducing an AI-driven conversational payment system based on the UPI system. Its successful implementation is likely to increase the adoption of the unified payments interface payment system. Also, the RBI is conducting a pilot program on the use of the digital Rupee. Despite the proposed [use of the CBDC](https://www.gate.io/learn/articles/what-are-central-bank-digital-currencies/363 "use of the CBDC"), there is no crypto regulation in India.

## FAQs about Crypto in India

### Is Gate.io legal in India?

Gate.io is a legit crypto exchange that is available in more than 180 countries including India. Gate.io offers various crypto services that include spot trading, futures, NFT marketplace and earn products.


<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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The Reserve Bank of India is planning to introduce an AI-powered conversational payment _ which is secure, safe and easy to use.

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Indian Central Bank Explores AI for Instant Payments