Reserve Bank of India’s (RBI) Executive Director Ajay Kumar Choudhary on Sunday said that the central bank is likely to launch the pilot of Central Bank Digital Currency (CBDC) for transactions in the interbank borrowing or call money market by October.
Pilot of the wholesale CBDC or the Digital Rupee-Wholesale (e-W) was launched in November last year. At the time, the use case was limited to the settlement of secondary market transactions in government securities. The pilot for the retail CBDC was started on December 1.
“The RBI will introduce the wholesale CBDC in the call market either this month or next month,” Choudhary was quoted as saying by PTI on the sidelines of the G20 Summit 2023. Choudhary’s statement comes days after Business Today reported citing sources aware of the matter that the central bank will soon extend the wholesale CBDC to the call money market.
A person familiar with the development had told Business Today that the purpose of extending wholesale CBDC to the call money market “is to try out different markets and technology”.
Union Finance Minister Nirmala Sitharaman announced the introduction of CBDC in the Union Budget 2022-23. For this purpose, necessary amendments were made to the relevant sections of the RBI Act 1934 with the passage of the Finance Bill 2022.
In 2022, the RBI floated digital Rupee, India’s very own CBDC, and an electronic form of sovereign currency. At the time, the central bank proposed to issue two versions of the digital Rupee- CBDC-Wholesale (CBDC-W) and CBDC-Retail (CBDC-R). While CBDC-W is for restricted access to select financial institutions, CBDC-R can be used by all including private sector, non-financial consumers and businesses.
The central bank picked nine banks for its pilot project for wholesale CBDC. These banks include State Bank of India (SBI), Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, YES Bank, IDFC First Bank and HSBC. e-R users can transact with digital Rupee using a digital wallet offered by participating banks.
The retail e-Rupee has been launched in denominations of 50 paise, 1, 2, 5, 10, 20, 50, 100, 200, 500, and 200 whereas the wholesale e-Rupee does not envisage any denomination, as per the central bank’s annual report 2022-23.
RBI showcased several digital initiatives that it has undertaken in the financial sector at the recently concluded G20 Leaders’ Summit. These include Public Tech Platform (PTP) for Frictionless Credit, CBDC, UPI One World, RuPay On-The-Go and Bharat Bill Payment System.
(With agency inputs)
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