The Reserve Bank of India (RBI) is likely to introduce a pilot Central Bank Digital Currency (CBDC) for interbank lending or call money market transactions by October, the central bank’s Executive Director Ajay Kumar Choudhary said on Sunday.
The pilot program for the Central Bank’s wholesale Digital Currency (CBDC) called the Digital Rupee (eW) was launched on November 1, 2022. Initially, its use case was limited to settling secondary market transactions in government securities.
RBI will introduce the wholesale CBDC
“The RBI will introduce the wholesale CBDC in the call market this month or next month,” Choudhary said on the sidelines of the G20 Leaders’ Summit.
Finance Minister Nirmala Sitharaman announced the introduction of CBDC in the Union Budget 2022-23. To facilitate this, necessary amendments were made to the relevant section of the RBI Act, 1934, with the passage of the Finance Bill 2022.
RBI selected nine banks for its pilot project
The RBI has selected nine banks for its pilot project for wholesale CBDC. These banks are: State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, YES Bank, IDFC Central Bank and HSBC.
In addition, the central bank has already rolled out a pilot project in the retail version of the CBDC (eR) on December 1, 2022. The eR is in the form of a digital token representing legal tender.
It is being issued in the same denominations as the paper currency and coins. It is distributed through financial intermediaries like banks. Users can transact with eR through a digital wallet offered by participating banks.
The RBI is showcasing various digital initiatives in the financial sector at the exhibition pavilion during the G20 Summit. These include Public Technology Platform (PTP) for Frictional Credit, CBDC, UPI One World, RuPay On-The-Go and Bharat Bill Payment System.
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