The Reserve Bank of India (RBI) is set to launch a retail Central Bank Digital Currency (CBDC) pilot in December. This will be the first time that a central bank launches a retail CBDC, and it could pave the way for wider adoption of digital currencies in India. The RBI has been exploring the possibility of issuing a CBDC for some time, and this latest development suggests that it is getting closer to rolling out such a project.
What’s the retail CBDC pilot all about?
According to the Economic Times of India, the RBI is nearing completion of the retail digital rupee pilot. State Bank of India, Bank of Baroda, ICICI Bank, Union Bank of India, HDFC Bank, Kotak Mahindra Bank, Yes Bank, and IDFC First Bank are among the participants. According to reports, the pilot will eventually include all of the country’s commercial banks.
Furthermore, the pilot will only be held in a few cities across the country. In addition, banks in those cities will be allowed to try out the e-rupee with a limited set of their customers. This translates to 10,000 to 50,000 customers per participating bank.
To fully utilize the new payment option, banks will need to collaborate with the PayNearby and Bankit platforms, according to the RBI. Digital rupees can be stored in special, downloadable wallets by both consumers and merchants. However, there are plans to integrate the digital rupee with existing bank apps and services in the future.
Future of Indian CBDC
India was among the first to establish a CBDC roadmap. In February 2022, Indian Finance Minister Nirmala Sitharaman announced the initial plans, announcing that a digital rupee would be a “significant boost” to the Indian economy. The RBI then presented a three-graded approach for its implementation, with the goal of causing minimal disruption to the traditional financial system.
On November 1, the RBI launched the wholesale segment pilot for the digital rupee. Its primary application has been to settle secondary market transactions in government securities. However, no information on the wholesale pilot’s successful conclusion is available at the time of writing.
Nonetheless, the entire CBDC process in India has been nothing less than exceptional. However, given India’s Finance Minister Nirmala Sitharaman’s stance on CBDCs, it is understandable that the plans have begun to unravel so quickly.