Reserve Bank of India Launches Digital Rupee on November 1

• Pilot Central-Bank-backed Digital Rupee to be launched by Reserve Bank of India.
• It will be used to settle secondary market transactions in government securities.
• Nine banks including the State Bank of India (SBI) will be participating in the pilot.

On Monday, the Reserve Bank of India announced it will introduce a pilot wholesale Central Bank Digital Currency (CBDC) on November 1.

RBI has identified nine leading banks to participate in the pilot. They are State Bank of India (SBIN), Bank of Baroda (BANK BARODA), Union Bank of India (UNION BANK), HDFC Bank (HDFC BANK), ICICI Bank (ICICI BANK), Kotak Mahindra Bank (KOTAK BANK), Yes Bank (YES BANK), IDFC First Bank (IDFC FIRST) and HSBC (HSBA).

In a statement, the RBI said that the pilot is intended to settle “secondary market transactions in government securities” to reduce transaction costs by avoiding the need for settlement guarantee infrastructure or for collateral to mitigate settlement risk.

RBI is also anticipating that the use of digital rupee, the wholesale segment (e-rupee-W), will  make the interbank market more efficient.

The launch of the e-rupee for the retail segment is planned within a month in select locations, says RBI. It will be for closed user groups comprising customers and merchants.

Earlier this month, the central bank published a fifty-page concept for the introduction of the CBDC. The RBI said that it has been exploring the pros and cons of CBDC for some time and is working toward a strategy to implement it in a phased manner.

India’s Finance Minister Nirmala Sitharaman has said that crypto will be part of the agenda when India takes over the G-20 group presidency for one year from December 1, 2022 to November 30, 2023. It is expected that India will have a prominent role in framing global crypto regulation.