RBI Set to Commence Digital Rupee Pilot in Call Money Market by October
The Reserve Bank of India is gearing up to launch a pilot program for Central Bank Digital Currency (CBDC) in the call money market by October, as part of its ongoing efforts to modernize the nation’s financial infrastructure.
The Reserve Bank of India (RBI) is on track to initiate a pilot program for the Central Bank Digital Currency (CBDC), referred to as the Digital Rupee, specifically targeting transactions within the interbank borrowing or call money market. RBI’s Executive Director, Ajay Kumar Choudhary, made this announcement on Sunday, indicating that the pilot is expected to kick off by October.
This strategic move follows the initial launch of the wholesale CBDC, known as the Digital Rupee-Wholesale (e-W), on November 1, 2022, with a primary focus on facilitating the settlement of secondary market transactions related to government securities.
Ajay Kumar Choudhary shared insights during the G20 Leaders’ Summit, stating, “The RBI will introduce the wholesale CBDC in the call market either this month or next month.” This step is part of the central bank’s commitment to embrace digital innovations and enhance the efficiency of financial operations in India.
The introduction of the Central Bank Digital Currency was officially announced in the Union Budget for 2022-23 by Finance Minister Nirmala Sitharaman. To support this initiative, necessary amendments to the relevant section of the RBI Act, 1934, were enacted with the passage of the Finance Bill 2022.
For the pilot phase of the wholesale CBDC, the RBI has engaged nine prominent banks: State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, YES Bank, IDFC First Bank, and HSBC. This collaborative effort aims to test and refine the functionality and viability of the digital currency in real-world financial transactions.
In parallel, the central bank has already commenced a pilot program for the retail version of the CBDC (e-R) on December 1, 2022. The e-R is presented in the form of a digital token, representing legal tender and available in denominations matching paper currency and coins. It is distributed through financial intermediaries, including banks, and users can conduct transactions using e-R via digital wallets offered by participating banks.
The RBI’s commitment to digital transformation in the financial sector is further showcased at the G20 Summit through various initiatives, including the Public Tech Platform (PTP) for Frictionless Credit, CBDC, UPI One World, RuPay On-The-Go, and the Bharat Bill Payment System. These endeavors underscore India’s dedication to embracing cutting-edge technologies to bolster its financial ecosystem.
Sources By Agencies
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