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The Reserve Bank of India (RBI) is gearing up to introduce a pilot program for its Central Bank Digital Currency (CBDC), known as the Digital Rupee-Wholesale (e-W), which will be focused on facilitating interbank borrowing within the call money market. According to Ajay Kumar Choudhary, Executive Director of the central bank, this pilot is expected to launch by October.
Initially launched on November 1, 2022, the wholesale CBDC was primarily designed for settling secondary market transactions involving government securities. Choudhary shared during the G20 Leaders’ Summit that the RBI intends to introduce the wholesale CBDC in the call money market either this month or in the following month.
The introduction of the CBDC was announced in the Union Budget for 2022-23 by Finance Minister Nirmala Sitharaman. Subsequently, the necessary amendments to the relevant section of the RBI Act, 1934, were made with the passage of the Finance Bill in 2022.
For the pilot project of wholesale CBDC, the RBI has partnered with nine banks, including 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.
Additionally, the central bank has already initiated a pilot for the retail version of the CBDC (e-R) on December 1, 2022. The e-R takes the form of a digital token representing legal tender and mirrors the denominations of paper currency and coins. It is being distributed through financial intermediaries, such as banks, and can be transacted using digital wallets provided by participating banks.
As part of its participation in the G20 Summit, the RBI is showcasing several digital initiatives within the financial sector, including the Public Tech Platform (PTP) for Frictionless Credit, CBDC, UPI One World, RuPay On-The-Go, and the Bharat Bill Payment System.
