RBI set to launch digital rupee pilot in call money market by October

The Reserve Bank is set to launch the pilot phase of its Central Bank Digital Currency (CBDC) for interbank borrowing or the call money market by October, according to central bank Executive Director Ajay Kumar Choudhary's announcement on Sunday.

The wholesale CBDC, known as the Digital Rupee-Wholesale (e-W), initiated on November 1, 2022, was initially limited to settling secondary market transactions in government securities.

Choudhary stated, "The RBI will introduce the wholesale CBDC in the call market either this month or next month," on the sidelines of the G20 Leaders' Summit.

The introduction of CBDC was part of the Union Budget 2022-23 and was announced by Finance Minister Nirmala Sitharaman. Amendments to the relevant section of the RBI Act, 1934, were made through the Finance Bill 2022.

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, were selected by the RBI for the wholesale CBDC pilot project.

Additionally, the central bank had previously initiated a pilot for the retail version of CBDC (e-R) on December 1, 2022. The e-R is issued in digital token form, representing legal tender, with denominations matching paper currency and coins. Distribution is managed through financial intermediaries like banks, and users can transact with e-R through digital wallets provided by participating banks.

At the G20 Summit, the RBI showcased various digital initiatives in 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.