Key Takeaways
- The CBDC pilot’s use case will be to settle secondary market transactions in government securities.
- The RBI has also picked out nine locally operating banks, including HDFC Bank, State Bank of India, Bank of Baroda, Union Bank of India, and ICICI Bank, among others, to participate in the project.
The Reserve Bank of India (RBI) is all set to launch the Central Bank Digital currency pilot starting in November. As per reports, RBI will launch the digital rupee pilot for the wholesale segment on November 1.
According to RBI’s official statement, the CBDC pilot’s use case will be to settle secondary market transactions in government securities. This is what is referred to as Wholesale CBDC and is tailored towards settling interbank transfers and related wholesale transactions in central bank reserves.
RBI further added that the digital Rupee is expected to provide more efficiency to the interbank market by reducing transaction costs of settlements. RBI has also picked out nine locally operating banks, including State Bank of India(SBI), Bank of Baroda, ICICI Bank, Kotak Mahindra Bank, HDFC Bank, Yes Bank, IDFC First Bank, HSBC, Union Bank of India, to participate in the pilot project.
The Government of India announced plans to launch Digital Rupee from the fiscal year 2022-23 onwards in the Union Budget placed in Parliament on February 1 this year. While announcing CBDC in February, Indian finance minister Nirmala Sitharaman declared that a digital rupee would be a “big boost” for India’s economy.
Earlier this month, the central bank hinted towards the pilot launch of CBDC. It said: “The Reserve Bank will soon commence pilot launches of e rupee for specific use cases. As the extent and scope of such pilot launches expand, RBI will also to communicate about the specific features and benefits of e-rupee from time to time.”
In an earlier released concept note on Central Bank Digital Currency, the Reserve Bank said CBDC is aimed to complement, instead of replacing, current forms of money and is made to provide an additional payment avenue to people, not to replace the already existing payment systems.
RBI said its approach towards CBDC is governed by two basic considerations – to create a digital Rupee that is as close as possible to a real paper currency and also to manage the process of introducing the e-Rupee seamlessly.
