The Reserve Bank of India (RBI) is gearing up to initiate the pilot phase of its Central Bank Digital Currency (CBDC) by October, according to statements made by Central Bank Executive Director Ajay Kumar Choudhary. The RBI had previously launched the pilot for its wholesale CBDC, known as the Digital Rupee-Wholesale (e-W), on November 1, 2022, with a focus on facilitating secondary market transactions in government securities.
Choudhary, speaking on the sidelines of the G20 Leaders’ Summit, indicated that the RBI is poised to introduce the wholesale CBDC into the call money market either in the current month or the following month.
The introduction of the CBDC was initially announced in the Union Budget 2022-23 by Finance Minister Nirmala Sitharaman. Subsequently, necessary amendments to the relevant section of the RBI Act, 1934, were enacted with the passage of the Finance Bill 2022.
The pilot project for the wholesale CBDC involved the participation of nine banks, namely, 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 had already initiated a pilot project for the retail version of the CBDC, known as e-R, on December 1, 2022. The e-R is designed as a digital token representing legal tender and is available in denominations similar to traditional paper currency and coins. It is distributed through financial intermediaries like banks, and users can engage in transactions with e-R through digital wallets provided by participating banks.
During the G20 Summit, the RBI is showcasing several digital initiatives in the financial sector at an exhibition pavilion. These initiatives encompass the Public Tech Platform (PTP) for Frictionless Credit, CBDC, UPI One World, RuPay On-The-Go, and the Bharat Bill Payment System. These endeavors reflect the central bank’s commitment to advancing digital innovation in the financial landscape.
