India is chairing BRICS this year, with leaders of the bloc set to meet in New Delhi on September 12 to 13. The Reserve Bank of India (RBI) proposed linking the countries' official digital currencies to facilitate cross-border trade, Reuters reported in January. 

The BRICS grouping includes Brazil, Russia, India, China and South Africa, Egypt, Ethiopia, Indonesia, Iran, Saudi Arabia, and the United Arab Emirates.

The proposal to link CBDCs would be a part of the agenda for the leaders' meeting, the sources said, although the limited adoption of digital currencies globally could complicate implementation. They did not want to be identified due to the sensitivity of the issue and because they are not authorised to speak to media. 

Emails sent to India's external affairs and federal finance ministries and the RBI were not answered.

India's proposal will build on the 2025 declaration at the BRICS summit in Rio de Janeiro, which pushed for interoperability between members' payment systems to make cross-border transactions more efficient.

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Any move towards linking CBDCs, however, is likely to face significant challenges. Previous discussions within BRICS on creating shared payment mechanisms have made little headway, underscoring the difficulties of integrating financial infrastructure across a diverse group of countries.

Strained relations between countries, such as Iran and the UAE, will remain a sticking point, with the UAE having cut financial ties with Iran, one of the two sources said.

India has also been reluctant to deepen financial connectivity with China, the second source said, adding that such arrangements would require deeper trust between the neighbours. India stalled Alipay+'s proposal to link with the country's instant payments system for cross-border transactions over national security concerns due to its Chinese links, Reuters reported.

Currency-swap arrangements would also be needed to help manage trade imbalances before any CBDC linkage could become operational, the source added.

BRICS nations have previously explored alternatives to dollar-based payments, including a proposal by Brazil for a common currency for the group, though the plan never advanced. US President Donald Trump had warned the bloc against such a move by threatening to impose high tariffs. 

India has no interest in replacing the dollar, and linking official digital currencies is aimed at making cross-border payments easier and faster, the second source said.

BRICS was created in 2009 as a forum for major emerging economies seeking greater influence in institutions dominated by Western powers.

It has since expanded and now includes Iran, Saudi Arabia and the United Arab Emirates -- three countries with sharply differing positions on the war launched by the United States and Israel in February.

"The Gulf conflict is going to be the central fault line this time during the BRICS summit," said Harsh V. Pant of India's Observer Research Foundation.

"What was seen until last year as an achievement -- the expansion of BRICS -- today looks like a big constraint on BRICS," Pant said.

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