RBI Increases CBDC Pilot in 2023

The Reserve Bank of India (RBI) stated in its annual report on May 30 that the central bank intends to extend the pilot phase for the central bank digital currency (CBDC) throughout the fiscal year 2023-24. During this time frame, the central bank intends to broaden the range of applications and features of the national digital currency.

The initial phase of the Digital Rupee – Wholesale pilot began on November 1, 2022, concentrating on the settlement of secondary market transactions in government securities within the wholesale sector.

The pilot phase for the retail segment was subsequently initiated on December 1, 2022. According to the annual report, the retail e-Rupee was introduced in multiple denominations, including 50 paise, 1, 2, 5, 10, 20, 50, 100, 200, 500, and 2,000, while the wholesale e-Rupee has no denomination.

The report indicates:

“Taking forward digitisation efforts announced in the Union Budget 2022-23, the Reserve Bank introduced its Central Bank Digital Currency (CBDC) in phases during the year, with the launch of pilots for Digital Rupee in the wholesale and retail segments on November 1, 2022, and December 1, 2022, respectively.”

“The pilots were preceded by issuance of a ‘Concept Note’ on CBDC to create awareness about CBDCs in general and the planned features of the digital currency in particular,” the central bank added.

The central bank initiated the first digital rupee exercise on the wholesale market on October 31, 2022, with the participation of nine banks: 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.

It is now proposed to expand the CBDC-Retail pilot to other locations and add more partner institutions. In accordance with its Payments Vision 2025, the central bank seeks to improve the efficacy of payment processing and settlements by implementing CBDCs domestically and internationally.

The RBI’s CBDC is a digital form of sovereign currency called the e-Rupee or Digital Rupee. The Reserve Bank defines CBDC as a digital legal tender issued by a central bank with the same value as fiat currency and exchangeable one-to-one.