The Reserve Bank of India (RBI) is gearing up to launch a pilot program for its Central Bank Digital Currency (CBDC) by October, according to Ajay Kumar Choudhary, the central bank’s Executive Director. The pilot, known as the Digital Rupee-Wholesale (e-W), initially launched in November 2022, was limited to settling secondary market transactions in government securities. Now, the RBI is preparing to extend the use of the wholesale CBDC to the call money market or interbank borrowing.
The introduction of the CBDC was first announced in the Union Budget for 2022-23 by Finance Minister Nirmala Sitharaman. Necessary amendments to the RBI Act of 1934 were subsequently made through the passage of the Finance Bill 2022.
For the pilot project, the RBI selected nine banks, including the State Bank of India, Bank of Baroda, HDFC Bank, ICICI Bank, and others. These banks have been actively involved in testing and developing the wholesale CBDC.
Additionally, the RBI has already rolled out a pilot for the retail version of the CBDC, known as e-R. E-R takes the form of a digital token representing legal tender and is issued in denominations similar to paper currency and coins. It is distributed through financial intermediaries such as banks and can be used for transactions through digital wallets provided by participating banks.
The RBI is showcasing several digital initiatives in the financial sector at the G20 Summit, including the Public Tech Platform (PTP) for Frictionless Credit, UPI One World, RuPay On-The-Go, and the Bharat Bill Payment System, emphasizing India’s commitment to technological advancements in the financial industry.
