• Sat. Jun 22nd, 2024

RBI’s Digital Rupee-Wholesale To Transform Interbank Transactions

ByNishat Manzar

Sep 10, 2023

The Central Bank Digital Currency (CBDC), which the Reserve Bank of India (RBI) intends to use for call money markets and interbank borrowing, is about to begin its experimental phase.

According to Ajay Kumar Choudhary, an executive director at the central bank, this rollout is anticipated to take place in October, as he shared during the G20 Leaders’ Summit in New Delhi on September 10.

The wholesale CBDC, known as the Digital Rupee-Wholesale (e-W), embarked on its pilot journey on November 1, 2022.Its initial use was limited to making secondary market transactions involving government securities easier to settle.

In order to shed light on the impending launch, Choudhary said, “This month or next, the RBI will debut the wholesale CBDC in the call market.” This development follows the Finance Minister Nirmala Sitharaman’s announcement in the Union Budget 2022-23 and the subsequent necessary amendments to the RBI Act, 1934, as enacted through the Finance Bill 2022.

Notably, the RBI handpicked a consortium of 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, for participation in the wholesale CBDC pilot project. This strategic selection reflects the central bank’s meticulous approach to testing and fine-tuning the technology and operational aspects before scaling up.

Additionally, on December 1, 2022, the central bank will launch e-R, a retail variation of the CBDC. E-R is represented as a digital token that has the same denominations as conventional paper money and coins and is therefore considered to be legal tender. Users can conduct transactions utilizing e-R using digital wallets offered by these partner banks, and it is made accessible through financial intermediaries like banks.

The RBI is actively emphasizing key financial industry digital technologies as part of its exhibit at the G20 Summit, including the Bharat Bill Payment System, CBDC,¬† RuPay On-The-Go, and the Public Tech Platform (PTP) for frictionless credit. These initiatives serve as a reminder of the RBI’s commitment to utilizing the advantages of technological advancements for enhancing financial services and promoting economic efficiency.